Small firms 'will be hit by pensions reform'

The pensions reform is likely to affect small firms quite badly, according to the British Chambers of Commerce (BCC).

A small business which is due for auto-enrolment a year before another small firm it competes with will face around £960 more in contribution costs than its rival company.

This impact of competition is likely to have a big effect on businesses, which firms are concerned about, according to BCC research.

In order to comply with the changes to the pensions system, firms will have to deal with a vast amount of administration and the costs to set-up the scheme could be high, particularly in small firms where there is no expertise in this area.

"[The BCC] have been supporters of auto-enrolment as a means to boosting retirement income. However, the complex web of regulations that were passed at the beginning of 2010 is not what was expected when the concept was first proposed four years earlier," said David Frost, director general of the BCC.

Recent research by Baring Asset Management revealed almost half (48 per cent) of British working adults have never reviewed their pension plans.

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