Fears for pubs over 'extortionate' pension costs

Pubs could face "extortionate" costs when new regulations over pensions come into force in 2012.

The Federation of Small Businesses (FSB) has warned that the scheme will cost small businesses £2,550 per year plus administrative costs.

From 2017 all firms and their staff must be enrolled into a pensions scheme and business owners will have to pay at least an extra 3% of an employee's salary into a pension fund.

The FSB argues that an average small firm — one employing four people — will pay a minimum of £2,550 a year in administration and pension costs. It believes a Government estimate of adminstration costs of £46 per employee is a "gross underestimation".

It is concerned that measures put in place by the Government to ease the financial burden on small businesses do not go far enough and that the Pensions Regulator will apply a heavy hand on small firms.

The FSB has called for the Regulator to clearly communicate to small businesses how they will be affected.

"It is vital that everyone is able to save for their future but the automatic enrolment scheme is going to cost the smallest businesses dear," said FSB policy chairman Mike Cherry.

"While Government has put measures in place to make the enrolment process easier for micro firms, it is going to cost them at least an extra £2,550 a year. The true administrative costs, however, are unknown and could be extortionate. We are calling on the Government to publish a proper impact assessment immediately to shed the true light on just how much these changes will cost small businesses."