On 12 January this year, the Secretary of State for Work and Pensions, Yvette Cooper announced:“the most radical change to workplace entitlements since the introduction of the national minimum wage”.
From October 2012, it will be compulsory for businesses with more than 120,000 staff to pay into a national pension scheme for their employees.
However, smaller firms are now being given some breathing space. Businesses with fewer than 50 employees will not be forced to comply until 2016.
Under the reforms, the minimum employer contribution is set to rise to 3% by 2017 but this will be staggered for small businesses and initially they will have to contribute just 1%.
When the reforms were first announced in 2006, it was feared that businesses of all sizes would be forced to pay identical compulsory pension contributions at the same time, giving small firms no time to adjust to the additional expense and red tape.
A survey carried out by the FPB following that initial announcement revealed that 70% of respondents were concerned they would not be able to afford the original proposals and believed they would damage their businesses while 64% said introducing compulsory pension contributions would prevent them from employing more people.
