Pension reforms will hit SMEs hard
Aug 12 2010
Pension reforms are only two years away
Companies with ten employees or less should be exempt from the forthcoming pension reforms.
The Federation of Small Businesses (FSB) says that it is impractical to make smaller companies enrol in the pension scheme which is due to come into force in 2012.
Mike Cherry, policy chairman for the FSB, says: ‘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.’
The FSB is lobbying the government to make those micro firms exempt from the automatic enrolment scheme and improve proposals for small firms. As an alternative to compulsory enrolment, the FSB has put forward the following suggestions:
· Deliver to all employees and the self-employed the opportunity to save for a pension at an annual charge of 0.3 per cent or less.
· Use a national payment collection scheme, such as PAYE, to decrease the administrative burden on small businesses.
· Provide members with the option of investment in very low cost funds.
· Keep contribution rates under constant review to identify whether changes are needed to achieve objectives.
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