Pension enrolment too onerous for small firms, says FSB
BUSINESS groups have criticised a decision by Government to make all companies, no matter how many workers they have, offer their staff pensions from 2012.
The changes announced by Government mean eight million people will save into pensions for the first time.
But the Federation of Small Businesses (FSB) said it is “extremely disappointed” very small firms – those with 10 staff or less – will be forced to take part in the scheme.
The body says the proposals are too complicated for many entrepreneurs and its own research suggests seven in 10 business owners do not feel confident in choosing a pension scheme for their staff.
It also says the costs and time spent on administrative work will damage very small businesses but it welcomed the Government’s decision not to make owners liable if something goes wrong with a particular pension.
Under the new rules companies will be allowed to wait three months before enrolling staff to reduce costs for those firms that employ many temporary workers. Staff must be earning £7,475 before they are enrolled.
The previous government first set out the pension plans and the latest announcement follows an independent review on the policy commissioned by the coalition. Under the plans workers will have to contribute 4% of their pay, with companies paying 3% and the Government adding a further 1%.
Mike Cherry, policy chairman at the FSB, said: “While the FSB welcomes initiatives to help people save for their future, it is severely disappointed the Government has not listened to the needs of the UK’s micro firms and has not made them exempt from automatic enrolment into pensions, which will cost employers in time and money.
“We know that small firms do not feel confident in choosing a pension scheme because of its complicated nature, so are pleased that the Government has put in steps, such as the waiting period, to make the administrative burden slightly easier.”
