Posted by

John Wastnage, Policy Adviser

14 Apr 2012

Most people will be aware that pensions have been a hot topic in Government, and some will know that a new pensions auto-enrolment duty is being introduced. Too many business owners have not realised the full extent of the responsibilities involved or that the reforms apply to businesses of all sizes.

Most business owners do not have an HR department and are not pensions experts and are likely to need external support in picking a pensions scheme, enrolling their employees, providing them with information, dealing with opt-outs, keeping records and so on. The Pensions Regulator needs to do more to communicate these duties to the business community so they can prepare. Government has published a revised timetable for different business sizes to begin auto-enrolment with larger companies starting in October this year, medium-sized businesses in 2014 and smaller businesses in 2015.

Business has a role in encouraging people to save for their retirement and pensions often form part of the ‘benefits package’ that attracts skilled workers and keeps them loyal to the firm. The Government’s role is less straightforward. Over the years regulation has responded to a number of pensions scandals with the aim of protecting members. Unfortunately the unintended cumulative effect has been to render those very pensions burdensome and unsustainable to employers.

Similarly, in these latest pension reforms, business generally accepts the direct costs of employer pension contributions, but these are dwarfed by the likely employer administration costs. Successful regulation works because compliance is easy; the complexity of these reforms risks pushing a large number of businesses into non-compliance, which would further damage the reputation of pensions as well as the reforms. Adam Marshall, BCC’s Director of Policy, recently took part in a Business Today debate about pensions reform and highlighted these concerns.

The Government’s Red Tape Challenge website provides a good opportunity to highlight damaging regulation on pensions, which is one of its general themes. The website will also focus on pensions as a spotlight issue from Thursday 19 April.