Small and medium sized businesses will be hit the hardest by pension reforms, business group have claimed.
The Federation of Small Businesses (FSB) has argued that small businesses should be exempted from pension reforms, warning that the financial burden of administrating staff pensions could damage small businesses with 10 employees or fewer due to their limited time and resources.
Under the Government pension scheme which is due to come into force in 2012, small businesses would be required to enrol all staff members in a pension scheme. The FSB has claimed this could cause smaller companies financial and regulatory difficulties.
FSB policy chairman, Mike Cherry, said: “We know that small firms do not feel confident in choosing a pension scheme because of its complicated nature and we are thoroughly disappointed that five years on from the original proposals, the pensions industry has yet to come up with an efficient system to cater for micro firms.”
He added: “The FSB is calling on the Government to make micro firms exempt from the automatic enrolment scheme and improve proposals for small firms.”
The FSB has put forward a number of alternative proposals to the scheme, which include the use of a national payment collection scheme such as PAYE to ease the burden on small business. The organisation has also proposed that all employees and the self employed are given the opportunity to save for a pension at an annual charge of 0.3 percent or less.