More than half of small and medium-sized businesses believe the government's plans to automatically enrole staff into pension schemes will add significantly to their costs, according to a survey by the Association of Consulting Actuaries (ACA)

Overall, 54% of smaller firms say they support auto-enrolment, but they expect 35% of employees to ‘opt-out' of the new pensions

Only one in five of the country's smaller employers have begun to consider the financial impact of new statutory rules from 2014 that will require them to auto-enrol millions of extra employees into workplace pension schemes - employees who at present have not joined schemes.


The success of the auto-enrolment policy in smaller firms is likely to hinge on how well the economy recovers over the next few years
Individuals will have to contribute at least 4% of their pay, companies 3% and the government will pay 1%. Companies have said that reasons staff did not joun their pensions schemes were cost, a preference to spend their money elsewhere and disillusionment with pensions.

The data also revealed that 66% of small firms say that employers with one employee should be exempt from operating auto-enrolment and 61% say employees with less than three months' service should not be auto-enrolled.

"The success of the auto-enrolment policy in smaller firms is likely to hinge on how well the economy recovers over the next few years. The opt-out rates expected are much higher than we found amongst larger organisations - 35% as against 15%," said ACA Chairman, Stuart Southall.

"The cost of pensions to both employees and employers is the big issue that has prevented the extension of pension provision to date in the sector. Whilst auto-enrolment may break the mould, if we are all still paying higher taxes to recover over-spending, it's difficult to see how this will not bump up opt-out rates."