Got Staff? Got a pension Scheme? Soon you will have no choice.

Pension reforms is one of the biggest challenges employers are likely to face over the next two years and it will almost certainly have a significant financial impact on your business.  Legislation that comes into fore in October 2012 means that businesses of every size will be legally obliged to enrol qualifying employees into a pension scheme.  

You will also be expected to make a contribution on your employees' behalf, starting at 1% in 2012 for large businesses and rising to 3% for all businesses by 2017.  To qualify, workers will need to be at least 22 years old, have not yet reached state pension age, earn more than the minimum earning threshold (currently £7,475 per year), and ordinarily work in the UK.  Those employees who have less than the qualifying earnings can voluntarily opt in.

How will it affect you?

If you are self employed or a one-man director company, you won't be affected.

All employers, however, will have to comply - even if you only have one employee;

The cost of pension starts at 2% of qualifying earnings, of which you, the employer must pay 1 %, rising to a total of 8% in 2017, of which 3% must come from the employer and !% will come from the Government.

If you don't have a scheme in place, the Government has approved a new pension scheme call NEST (National Employment Savings Trust), which is available to any employer. www.nestpensions.org.uk

To widen the choice available to small businesses and to offer an improvement on the Government Scheme, the FSB has been working with its independent financial advisers, IFS (UK), and Scottish Widows to provide a credible alternative to NEST.  To find out more about the FSB Auto Enrolment Pension Scheme visit www.fsb.org.uk/pension-scheme