View more on these topics

Auto-enrolment costs may see employee benefits cut

Auto-enrolment will impose considerable start-up costs on small businesses, which could affect employee benefits and the cost of goods and services, according to the Federation of Small Businesses.

Giving evidence to the Work and Pensions select committee last week, FSB head of policy Graeme Fisher said a firm with four employees on annual salaries of £25,000 could face an additional cost of £2,500 to get the scheme up and running.

He said: “There will be considerable start-up costs in the first year to implement and get used to the system. This is money firms could use elsewhere, for marketing or business development. We question the impact it will have on wages, prices and other areas.”

Fisher told MPs that the Department for Work and Pensions’ estimates that administrating the scheme will cost firms £46 a year per employee are too low.

He said: “If you assume a wage rate for the administrator of £10 per hour, that would mean roughly 20 minutes a month per employee, which, on the basis of experience with tax returns, seems to be a very low estimate.”

British Chamber of Commerce director general John Longworth said the auto-enrolment rules are “extremely complex and bureaucratic”. He said a survey of 7,000 BCC members found that one in four firms will be put off taking on employees as a result of auto-enrolment.

He said: “If we do not have it in the least bureaucratic form possible it will have the impact of reducing employment as well as possibly choking off economic growth, both of which are very important at the moment.

“Unlike Mervyn King, businesses cannot print money. There is only one pot to pay for everything, so if there is a cost in one place it has to come from somewhere else.”

Recommended

Cofunds: We are not up for sale

Cofunds has denied reports that it is in negotiations to sell off the business. The Sunday Telegraph reported earlier that Legal & General had launched a bid to acquire the funds supermarket. However, Cofunds has denied that the board has any plans to sell the business, via twitter. Speculation grew after it was announced today […]

Campaign aims to explain RDR

The FSA is planning a consumer communications campaign to explain the RDR changes to the advice market but will not reveal how much it will cost. In its report on the RDR, the Treasury select committee raised concerns over clarity of the independent and restricted adviser labels and called on the regulator to provide “significant […]

Positive sceptic

With so much bad news to digest in the West, the increasingly bullish consensus on Asia and emerging markets is easy to understand. But most of the best-performing managers in these areas are of a more naturally defensive nature and Schroders’ Robin Parbrook sits comfortably in that camp. Based in Asia for more than two […]

Bolton’s China trust reports “disappointing” results

The half year results for Anthony Bolton’s Fidelity China Special Situations investment trust make for “disappointing reading”, according to John Owen, chairman at Fidelity. The investment trust has underperformed its MSCI China index benchmark, as net asset value dropped 28.9 per cent. Owen says: “The board acknowledges that the results for the six month period […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. we should all keep the pressure on for the government to set the entry level at 12500 not 7500 and the minimum number of emplyees as 5

  2. Most employees earn low wages and will opt out as a result, especially when the employee contributions reach 5%! It will end up with a lot of employee opting out of NEST and will be a waste of time as it won’t have the desired effect the Government had intended!

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com