SMEs 'will be hit by pensions reform'

09/09/2010

Small and medium-sized enterprises (SMEs) are likely to be hit hard by the pensions reform, it has been suggested.

New research from the British Chambers of Commerce (BCC) has looked at the impact auto-enrolment could have on small firms.

An SME due to engage in auto-enrolment 12 months before a firm it competes with will face costs around £960 more than the rival SMEs.

This impact of competition could have a big effect on firms and they are concerned by this, the BCC research found.

In SMEs where there is unlikely to be expertise in the area of pensions, the costs of setting up a scheme are likely to be high, as well as the additional administration that will need to be carried out to comply with the changes.

David Frost, director general of the BCC, said that the organisation has been supportive "of auto-enrolment as a means to boosting retirement income".

"However, the complex web of regulations that were passed at the beginning of 2010 is not what was expected when the concept was first proposed four years earlier," he added.

Recent research by Baring Asset Management revealed nearly half (48 per cent) of British working adults have never reviewed their pension plans.

Posted by Nicola Richards