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Business criticises plans to include micro firms in pension reforms


Business groups have expressed their ‘disappointment’ over the Government’s decision to include micro firms in its overhaul of private sector pensions.

The Government has confirmed that all businesses, regardless of their size, will be required to offer a company pension in the future. Where the employer does not provide such a scheme, employees must be enrolled automatically into the new National Employment Savings Trust (Nest).

Yet the Federation of Small Businesses (FSB) has warned that the proposals are too complicated for micro firms to implement and may discourage small companies from taking on new members of staff.

‘While the FSB welcomes initiatives to help people save for their future, the FSB is severely disappointed the Government has not listened to the needs of the UK's micro firms and has not made them exempt from automatic enrolment into pensions, which will cost employers in time and money,’ said Mike Cherry, FSB Policy Chairman.


‘We know that small firms do not feel confident in choosing a pension scheme because of its complicated nature, so are pleased that the Government has put in steps, such as the waiting period, to make the administrative burden slightly easier.’ 

To be eligible for automatic enrolment, staff will need to be aged 22 or over and earn at least £7,475 a year.

However the Pensions Minister, Steve Webb, has revealed that firms will not be required to automatically enrol employees on their first day of work. Instead, they will be able to wait up to three months – a move welcomed by the British Chambers of Commerce (BCC).

‘Thanks to the 12-week exemption, companies with a high turnover of staff or a large number of seasonal workers will not have to spend a lot of time and money enrolling employees into pensions that they do not intend to continue,’ said the BCC’s Director of Policy, Adam Marshall.

The changes will begin to take effect in October 2012, with the largest employers joining first and the smallest joining by September 2016. Contributions from staff and employers will also be phased in.