The Federation of Small Businesses have stated their position on the automatic pensions enrolment scheme which is due to commence in 2012. They believe that micro businesses should be exempt from this scheme as it would be a financial and administrative burden for firms with less than 10 employees.

FSB Policy Chairman, Mike Cherry, stated: “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.”

The FSB also believe there are issues regarding the expertise that is required to select a pension and put the proposed changes in place for employees. They have researched this issue and 70% of small business owners said they did not feel confident choosing their employees’ pension.

They have proposed, instead, a default scheme which employees without other savings or pension provision would be enrolled into. They believe such a scheme should be collected through PAYE or similar and the money invested in low risk funds.

He continued: “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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