Businesses ‘ill prepared’ for pension reforms

More than half of UK businesses are unaware of Government proposals to extend the eligibility for enrolment in a pension scheme, according to a new study released by the British Chambers of Commerce (BCC).

Around 966,000 firms will incur added employment costs when the new pension regime is implemented in 2012. However, 56% of businesses questioned by the BCC said they were ‘quite or completely’ unaware of the forthcoming reforms.

The Department for Work and Pensions has estimated that the cost of the changes on small and medium-sized enterprises will be £1.6 billion, yet just 10% of businesses surveyed knew how much the reforms would cost them.

From 2012 employers will be compelled to automatically enrol staff into a qualifying pension scheme. As part of the process, members of pension plans who do not choose an investment fund for their Personal Account will have their pension monies invested in a Default Fund.

Commenting on the results of the study, BCC Director General, David Frost, said: ‘Not enforcing the changes until 2012 is a smart move as it allows employers some time to phase in the reforms.

‘But as our survey clearly shows, more action is needed to improve employer awareness so that businesses are not caught out and left unable to safely plan for their financial future.’