The Department for Work and Pensions has confirmed that every UK Company will have to offer a pension scheme, which will be phased in from 2012, including small businesses, which by 2014 should have a scheme in place.
It has been claimed that this announcement could prove expensive for smaller firms with all employers having to enrol their staff in a workplace pension fund by 2017, unless employees opt out or are already members of a qualifying scheme. “Employers will be expected to pay a minimum of 3 per cent of an employee’s salary into the pension” comments Gary Mothersill, Independent Financial Adviser from Chartered Accountants Morris Owen.
The government has calculated that the administrative cost to very small employers will be £46 for each four employees. However, the Federation of Small Businesses (FSB) has questioned the calculation,
describing it as a gross under -estimation and wants the government to publish an impact assessment immediately.
“The FSB has said that the changes could end up costing the average small firm – one with four employees earning an average salary of £25,000 – an extra £2,550 per year in administration and pension costs. The FSB’s view is that micro firms should be exempt from the scheme. While conceding that measures have been put in place to ease the administrative burden for small businesses, the FSB has expressed concern that they do not go far enough”.
The FSB has also urged the Pensions Regulator to adopt a light-touch approach towards smaller employers when the rules come into effect, and to communicate clearly and effectively with small businesses on what the new regulations will require of them.
And Gary agrees, “Small firms are already under severe pressure in the current economic environment so forcing this onto them at this time could prove to be difficult. That said the smallest firms will be amongst the last to be brought into the new rules so at least they have time to plan carefully for this inevitable cost”.
For more information on the new pension rules Gary Mothersill can be contacted at Morris Owen on 01793 603900 or email:
gary.mothersill@morrisowen.com.
The Department for Work and Pensions has confirmed that every UK Company will have to offer a pension scheme, which will be phased in from 2012, including small businesses, which by 2014 should have a scheme in place. It has been claimed that this announcement could prove expensive for smaller firms with all employers having to enrol their staff in a workplace pension fund by 2017, unless employees opt out or are already members of a qualifying scheme. “Employers will be expected to pay a minimum of 3 per cent of an employee’s salary into the pension” comments Gary Mothersill, Independent Financial Adviser from Chartered Accountants Morris Owen.The government has calculated that the administrative cost to very small employers will be £46 for each four employees. However, the Federation of Small Businesses (FSB) has questioned the calculation,describing it as a gross under -estimation and wants the government to publish an impact assessment immediately.
“The FSB has said that the changes could end up costing the average small firm – one with four employees earning an average salary of £25,000 – an extra £2,550 per year in administration and pension costs. The FSB’s view is that micro firms should be exempt from the scheme. While conceding that measures have been put in place to ease the administrative burden for small businesses, the FSB has expressed concern that they do not go far enough.”
The FSB has also urged the Pensions Regulator to adopt a light-touch approach towards smaller employers when the rules come into effect, and to communicate clearly and effectively with small businesses on what the new regulations will require of them.And Gary agrees, “Small firms are already under severe pressure in the current economic environment so forcing this onto them at this time could prove to be difficult. That said the smallest firms will be amongst the last to be brought into the new rules so at least they have time to plan carefully for this inevitable cost.”
For more information on the new pension rules Gary Mothersill can be contacted at Morris Owen on 01793 603900 or email:gary.mothersill@morrisowen.com.
