The Pensions Bill currently being read in parliament will add to the red tape burdens already faced by small businesses, the Forum of Private Business has said.
The bill would force employers to contribute a minimum of 3% of their workers' earnings to pension schemes for staff earning between £5,035 and £33,540.
The legislation would prevent employers from offering incentives for employees to opt out, leaving employers to foot the bill for pensions.
The FPB said the notion that all employers can afford to pay into pension schemes is “misguided”. It insisted the decision whether or not firms can afford to offer such a scheme should be left in the hands of individual businesses.
"Our members are already struggling under the burden of red tape, which is increasing at an alarming rate," said Phil Orford, the FPB's chief executive.
"The additional paperwork and costs that would be imposed on them could be extremely harmful. The FPB believes that this should be a decision made by business-owners, based on their ability to afford to offer pension schemes."
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