FSB: Automatic enrolment into pensions should not include micro firms

The Federation of Small Businesses (FSB) is extremely disappointed that the Government will not make micro firms exempt from automatic enrolment into pension schemes, due to come into force in 2012.

The proposed changes are still complicated for micro businesses to put in place, and the FSB is concerned that these businesses do not have the expertise to choose a pension scheme for their staff – FSB research shows that seven in 10 business owners do not feel confident in choosing a pension scheme for their staff.

The FSB has constantly warned that the cost and time spent on administrative work will damage micro firms – those with 10 employees or less – and that the pension schemes set up by Government still do not meet the needs of micro firms – 95 per cent of all UK businesses.

However, it is pleasing that the Government has listened to the FSB and will not make small business owners liable for the particular pension scheme chosen should something go awry.

The FSB also welcomes that the Government has at last decided to adopt a three month waiting period before an employee has to be automatically enrolled, and that members of staff do not need to be enrolled until they are earning more than the threshold for their personal allowance on income tax – to help ease the administrative burden.

The FSB is still warns that the majority of small businesses and their employees are unaware that the country’s pension scheme will change in only two years time, and is now calling on the Government to raise awareness of the default pension scheme to ensure that this ticking time bomb doesn’t hit small firms without effective communication.

Mike Cherry, Policy Chairman, Federation of Small Businesses, said:

“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.”

ENDS

Notes to Editors

1. The FSB is the UK’s leading business organisation with over 213,000 members. It exists to protect and promote the interests of the self-employed, and all those who run their own business. More information is available at www.fsb.org.uk.

2. To read the consultation response, please go to www.fsb.org.uk

3. To view a copy of the Pensions survey, please email prue.watson@fsb.org.uk

Contacts

Stephen Alambritis: 020 7592 8112/ 07788 422 155
Prue Watson: 020 7592 8121 / 07825 125695 prue.watson@fsb.org.uk