FSB: ‘Pension time bomb will cost small firms £2,250 a year' (From Watford Observer)
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FSB: ‘Pension time bomb will cost small firms £2,250 a year'
9:00am Wednesday 17th November 2010 in Business News
Automatic enrolment into a pension scheme, due to come into force in 2012, will cost small businesses an extra £2,550 annually, the Federation of Small Businesses (FSB) has warned, but fears that the true administrative costs could be extortionate.
From 2017, all firms and their staff will have to be fully enrolled into a pension scheme and business owners will have to pay a minimum of three per cent of an employee's salary into a pension.
As a result, the average small firm - those with four employees earning an average salary of £25,000 - will pay at least an extra £2,550 per year in administration and pension costs, the FSB says.
The Government has said it will cost micro firms with up to four employees £46 per person in administration. The FSB is urging the Government to publish an impact assessment immediately.
The FSB has been calling on the Government to make micro firms exempt from the automatic enrolment scheme, as it will cost them in both time and money, and is disappointed their calls have been ignored.
The FSB calls for the Pensions Regulator to adopt a light handed approach when the rules are put in place before any financial penalties are enforced, and to clearly and effectively communicate to small businesses how the new regulations will affect them and what will be required.
FSB Beds Cambs & Herts Chairman Ian Cording said, "It is vital that everyone is able to save for their future but the automatic enrolment scheme is going to cost the smallest businesses dear.
” While Government has put measures in place to make the enrolment process easier for micro firms, it is going to cost them at least an extra £2,550 a year.
” The true administrative costs, however, are unknown and could be extortionate. We are calling on the Government to publish a proper impact assessment immediately to shed the true light on just how much these changes will cost small businesses."
