While auto-enrolment has been successfully implemented by many large businesses across the country over the past year, the CIPD said it is "concerned" the process for SMEs may not be "plain sailing".
A CIPD report, Pensions auto-enrolment: the lessons for SMEs,has warned that any company staging in 2014 needs to start preparations now to overcome the challenges of having limited resources.
Charles Cotton CIPD performance and reward adviser said while large companies have "established traditions" around them, for many SMEs it's their "first foray" into the world of pensions.
"They are unlikely to have access to the same levels of expertise or support networks as their larger counterparts, and many fear it could be a costly exercise for their business."
The study found many SMEs fear they will struggle to absorb both administrative costs incurred through adopting auto-enrolment and the cost of employer contributions.
More than a quarter anticipate they will need tor reduce pay growth, while 22% expect to have to freeze pay in order to cope with the costs.
Low-opt out rates
The study also found the number of employees choosing to opt-out of auto-enrolment remains low, while the average contributions from employees and employers are high at around 4% and 6% respectively.
The study, based on a study of 399 private sector organisations, found only a small minority of large employers (9%) have sought to recoup the cost of auto-enrolment by limiting pay or cutting other elements of the pay package.
