Business News
Business leaders criticise plans to include small firms in pension reforms
Business groups across the UK have expressed their ‘disappointment’ over the Government’s decision to include small or ‘micro’ firms in its revamp of private sector pensions.
The Government confirmed that all businesses, regardless of their size, will be required to offer a company pension to employees in the future. Where the employer does not provide such a scheme, employees must be enrolled automatically into the newly created National Employment Savings Trust, or NEST as it is to be called.
The changes will begin to take effect in October 2012, with the largest employers joining first and the smallest joining by September 2016. Contributions from staff and employers will also be phased in.
The Federation of Small Businesses, FSB, has spoken out against the plans, outlining that they are too complicated for small firms to realistically implement and might even discourage them from taking on new staff.
Mike Cherry, Chairman of Policy at the FSB, explained: “While the FSB welcomes initiatives to help people save for their future, the FSB 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.”
To qualify for automatic enrolment staff will need to be aged 22 or over and earn over £7,475 a year.
However, the Pensions Minister, Steve Webb, has outlined that firms will not be required to automatically enrol employees on their first day of work; instead, they will be able to wait up to three months, a move that has been applauded by the British Chamber of Commerce.
“Thanks to the 12-week exemption, companies with a high turnover of staff or a large number of seasonal workers will not have to spend a lot of time and money enrolling employees into pensions that they do not intend to continue,” said the BCC's Director of Policy, Adam Marshall.
