ALL micro firms should be exempt from the automatic enrolment pension scheme due to come into force in 2012, the Federation of Small Businesses (FSB) said this week.

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ALL micro firms should be exempt from the automatic enrolment pension scheme due to come into force in 2012, the Federation of Small Businesses (FSB) said this week.

The FSB is calling for all micro businesses to be exempt from automatically enrolling their staff into a pension scheme, to remove the regulatory and financial burden on these businesses.

Responding to the consultation ‘Government review of automatic enrolment’, the FSB warns that the cost and time spent on administrative work will damage micro firms – those with 10 employees or fewer – and that the pension schemes set up by Government do not meet the needs of micro firms.

For small and medium-sized businesses, the FSB is instead calling for a default scheme to be set up in which everyone who is not currently saving should be enrolled. It should deliver to all employees and the self-employed the opportunity to save for a pension at an annual charge of 0.3 per cent or less, use a national payment collection scheme, such as PAYE, to decrease the administrative burden on small businesses, provide members with the option of investment in very low-cost funds, and keep contribution rates under constant review to identify whether changes are needed.

The FSB is also worried that the majority of small businesses and their employees are unaware that the country’s pension scheme will change in only two years’ time.

FSB Huntingdonshire chairman Malcolm Lyons said: “The FSB welcomes initiatives to help people save for their future in a pension, but we are still concerned the new automatic enrolment pension scheme is going to be an administrative headache for small firms – particularly micro firms – and will cost them in time and money and potentially jobs as well.

“We know that small firms do not feel confident in choosing a pension scheme because of its complicated nature, and we are thoroughly disappointed that, five years on from the original proposals, the pensions industry has yet to come up with an efficient system to cater for micro firms.

“The FSB is calling on the Government to make micro firms exempt from the automatic enrolment scheme and improve proposals for small firms.”

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