Small businesses fight against pensions, employee benefits

If you’re an employee looking for more benefits from your company, then you may find yourself at the wrong end of a battle between smaller businesses and the government, according to the latest survey from the Institute of Directors (IoD). 

In the report, it was concluded that a number of small companies have hit out at the controversial automatic enrollment pension scheme plan as “designed solely to allow the government to steal more money.” As such, this handful of organisations with plans to flout the law would impact not on MP ideals, but their workers’ back pockets in later life. One company leader even went so far as to say: “We will not be spending any money doing something that we do not want to do. Catch us if you can.” 

Under laws that took hold in 2012, every employer in the country is obliged to enrol staff into a pension scheme. It requires employees to be the age of 22 or older, and have them earn enough to pay tax. While huge corporations have been subject to this law for the last few years, the scheme is being progressively rolled out to smaller firms over the coming months. 

Employees must contribute one per cent of their income salary, though they’re given tax relief on this; however, employers must put in an additional two per cent. Employees are automatically enrolled, but are allowed to leave a scheme immediately should they see fit. 

Many employees are often unaware of the changes despite the need for companies to inform them of the change, though new attitudes in light of the credit crisis have led to many people changing arrangements for themselves and their families, from taking out regular and junior ISAs to confiding their savings in a private pension, responding to the low interest rates of recent years. 

However, the IoD flagged the fact that attitudes to flout the law are forthcoming from a small pocket of members, branding it “a worrying development”, and one that shows how “not all employers are coming quietly”. 

Commenting on the development, the IoD continued: “We cannot infer from these comments that such attitudes will be widespread, but the research gives a sense that as employers – and particularly small employers – start to comprehend the enormity of the task in front of them, hostility to automatic enrolment, as opposed to grudging reluctance, might increase.” 

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