A new pension plan is going to hit small businesses very hard when it comes into force starting next year. All businesses starting in 2012 with employees that earn more than the income tax personal allowance will be required to enroll into a pension scheme and pay a minimum of 3% as a contribution.
The Institute of Directors (IoD) has surveyed firms about the new regulations and said that over 95% of the businesses that at present do not have a pension arrangement for their employees into which the employer makes contributions are SMEs. They will have to set up and auto-enroll and fund the scheme without any help that big businesses get from their human resources department.
Miles Templeman the IoD director general said the government must not underestimate how much auto enrollment is a cost burden for the small firm. Bigger businesses for the most part have pension arrangements set for their employees.
Off course the retirement provision in the UK must be improved but like always it is the small businessman that gets hit. The IoD also said that 20% of small businesses were unaware the legislation was to be introduced in 2012.