29 October 2010, 13:57 PM
  • Under new rules announced by the Government last week, every business – regardless of size – will have to provide a pension scheme to its staff

The new rules, which will come into force in 2012, have been put in place to ensure that people start to build up savings for their old age. However, experts have warned that the cost and time spent on administrative work could damage companies as they struggle to rebuild themselves following the recession.

The Federation of Small Businesses (FSB) has expressed its concern that so-called ‘micro firms’ will not be exempt from the scheme. “We know that small firms do not feel confident in choosing a pension scheme because of its complicated nature,” said Mike Cherry, policy chairman at the FSB. Indeed, according to research by the organisation, seven in ten business owners do not feel confident in choosing a pension scheme for their staff.

Retailers will eventually have to pay a minimum of three percent of wages into a pension scheme for staff members who earn more than £7,475 a year and are aged 22 and over.
It will be implemented between 2012 and 2017, and even businesses employing just one worker will have to pay in.

“While we welcome initiatives to help people save for their future, we are 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 time and money,” added Mr Cherry.

However, there will be a three-month waiting period before employees qualify, allowing retailers to avoid paying out for temporary or seasonal workers. Overall, the rules are predicted to ensure that more than four million additional people start saving for later life.