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Small businesses attack ‘never-ending saga’ of auto-enrolment

The Federation of Small Businesses has launched a blistering attack on the “never-ending saga” of auto-enrolment, criticising the cost to firms alongside transparency of pension charges and the quality of Government communications.

Speaking at a Social Market Foundation fringe event at the Conservative conference in Manchester yesterday, FSB national policy chairman Mike Cherry said the original intentions of auto-enrolment have been “skewed”.

Auto-enrolment was introduced for the biggest companies in October and will roll out to all firms in a series of staging posts between now and June 2015 when it will apply to micro-firms of less than 10 staff.

Cherry said: “It seems to be a never-ending saga. It started in 2005 when it had cross-party support so it was a done deal as far as business was concerned.

“Lord Turner’s original intentions have been skewed. Since then we have had choice brought in which is a retrograde step.

“For our members it is about affordability and any question of choice leaves the associated liabilities of making the wrong choice for their employees, which could come back to bite them in the future.

“Despite Government re-assurances that it is most unlikely to happen it does raise comments from our members.”

Cherry said the Government’s advertising and communications campaign had not done “anywhere near” enough to make people aware of the changes.

He also slammed the pensions industry for being “incredibly bad” at making charges transparent and called for more action on disclosure of fees.

The Forty Group of Conservative backbench MPs have called for micro-firms to be exempt from the reforms.

Cherry said: “We were calling for an exemption for micro-businesses and moved significantly forward on it but our lobbying will now focus on the remaining administration and cost burdens.

“It is not helpful to hear political comments on the national minimum wage too. I am worried about the impact of the minimum wage going up too much when auto-enrolment kicks in and the double whammy which could face firms.”

Speaking alongside Cherry, Conservative MP Harriett Baldwin said: “There were some changes to the timetable for micro-business but I do not anticipate any further changes to it.”

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Comments

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  1. Indeed. Small firms are worried about choice as they may choose the wrong thing. However they are only worried because this infernal scheme is compulsory and therefore gives them NO choice in this respect. Given free non-compulsory choice they are more than happy. They can choose between providers, they can choose whether to pay by single premiums, whether to reduce premiums when the firm isn’t doing well and to be able to choose to reward those in the firm who deserve extra recognition. In other words they are left alone to choose how best to run their own business and not forced to become an ex-officio branch of the Government’s benefit system or tax collector. (They already do that anyway for PAYE).
    Employees for their part can chose which funds and even which provider they prefer and indeed whether to contribute or not. Many regard NI as their compulsory pension contribution and wonder what this extra is all about. They are inclined to ask that if the Government has decided that current pension provision is insufficient then why don’t they improve it through the current apparatus. As an adviser I find myself at a loss to explain this satisfactorily. I can only imagine it is because our dishonest politicians either:
    a) Want to continue to con the public that we have a basic rate of tax of 20% which they don’t want to increase. (To fund proper State pensions).
    b) They have come to the conclusion that they are too inept to manage State Pensions at all. In which case what not abolish or reduce NI and increase the AE levels pro rata?

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