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Increased auto-enrolment contributions could have ‘substantial’ impact on smaller employers

April 11, 2019 / Juliette Rowsell

Changes to auto-enrolment pensions will have a “substantial” effect on small businesses, the Federation for Small Businesses (FSB) has warned, after minimum contributions for employers rose from 1 per cent to 3 per cent last weekend. The trade body said the recent increase in minimum contributions would have both financial and capacity implications for smaller employers. The warning comes as new research by the Institute for Fiscal Studies (IFS) shows auto-enrolment has caused a dramatic increase in the number of workers employed by small businesses – those with between two and 29 employees – participating in workplace pensions. “The costs involved for small employers are substantial, in terms of both expenditure, and indeed their time, as they have grappled with finding a good provider and setting up whole new systems,” said Mike Cherry, FSB national chairman. “Now the 3 per cent rate has hit, the burden will be greater still.”