SMEs mustn’t neglect pensions

Small businesses should not be exempt from employee pension schemes, claims the Confederation of British Industry (CBI).


Small businesses should not be exempt from employee pension schemes, claims the Confederation of British Industry (CBI).

Small businesses should not be exempt from employee pension schemes, claims the Confederation of British Industry (CBI).

Katja Hall, CBI director of employment policy, says: ‘Automatically enrolling people into pension schemes is the right thing to do, but the reforms must cover all employers and be easy to implement. We must avoid creating a two-tier pensions system, where a huge number of employees are still left uncovered.’

From 2012, employees will be automatically enrolled into a pension scheme, with their employer contributing a minimum of 3 per cent into the fund. However, “micro businesses” (firms with fewer than five staff) are to be exempt from automatic enrolment.

Jon West, managing director of the UK and Ireland branch of online hotel reservation service HRS, agrees with the CBI’s stance. ‘More should be done for the employee. Investing in an employee’s pension is another way of retaining staff,’ he says.

The Federation of Small Businesses (FSB) believes any reforms at this stage could be damaging to the UK’s smallest companies. A spokesperson says: ‘The FSB does not think that micro businesses should be automatically enrolled because it would add extra regulatory burden, especially for smaller businesses who wouldn’t have a HR department that could deal with this issue or know what the best scheme is.’

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