Small Business should not be included in automatic pension’s scheme

The Federation of Small Business announced that they that believe micro businesses should not be included in the new automatic pension’s scheme that will roll out in 2012.  According to the FSB, automatic enrolment in the scheme would be an administrative and financial problem for firms that d not have more than ten employees.

Mike Cherry, the FSB Chairman, stated that the FSB welcomes initiatives from the government designed to help people who want to plan for their future retirement with a pension, but are concerned with automatic enrolment since it will be costly both in terms of money and time for smaller firms.

The FSB also has concerns over the expertise that is required in order to guide employees towards the right pensions with the changes that are poised to take place.  In a survey conducted by the FSB, they found that about 70% of all small business owners were not confident that they could choose the best pension for their employees.

In place of the automatic enrolment scheme for small businesses, the FSB has proposed that a default scheme be developed in which employees that have a pension provision or no other savings could be placed into so that money would be safely placed in low risk funds.

Cherry added that small business owners are uncomfortable with choosing a pension scheme because of the complicated nature of the task and they are disappointed that a solution for small firms has not yet been developed by the pensions industry.