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FSB News Release  

PR 2010 43 

Issue date: Thursday 12 August 2010  

Micro firms should be exempt from pension reform ticking time bomb  

All micro firms should be exempt from the automatic enrolment pension scheme due to come into force in 2012, the Federation of Small Businesses (FSB) said today.  

The FSB is calling for all micro businesses to be exempt from automatically enrolling their staff into a pension scheme to remove the regulatory and financial burden on these businesses.  

Responding to the consultation, ‘Government review of automatic enrolment’, the FSB warns that the cost and time spent on administrative work will damage micro firms – those with 10 employees or less – and that the pension schemes set up by Government do not meet the needs of micro firms.  

The proposed changes are also very complicated for small businesses to put in place, and the FSB is concerned that small firms do not have the expertise they need to choose a pension scheme for their staff – FSB research shows that seven in 10 business owners do not feel confident in choosing a pension scheme for their staff.  

For small and medium sized businesses, the FSB is instead calling for a default scheme to be set up in which everyone who is not currently saving should be enrolled. It should be based on the following principles to: 

• Deliver to all employees and the self-employed the opportunity to save for a pension at an annual charge of 0.3 per cent or less.
• Use a national payment collection scheme, such as PAYE, to decrease the administrative burden on small businesses.
• Provide members with the option of investment in very low cost funds.
• Keep contribution rates under constant review to identify whether changes are needed to achieve objectives.

The FSB is also extremely worried that the majority of small businesses and their employees are unaware that the country’s pension scheme will change in only two years time, and is calling on the Government to raise awareness of the default pension scheme to ensure that this ticking time bomb doesn’t hit small firms without warning.

Mike Cherry, Policy Chairman, Federation of Small Businesses, said: 

“The FSB welcomes initiatives to help people save for their future in a pension but we are still concerned the new automatic enrolment pension scheme is going to be an administrative headache for small firms – particularly micro firms – and will cost them in time and money. 

“We know that small firms do not feel confident in choosing a pension scheme because of its complicated nature and we are thoroughly disappointed that five years on from the original proposals, the pensions industry has yet to come up with an efficient system to cater for micro firms. The FSB is calling on the Government to make micro firms exempt from the automatic enrolment scheme and improve proposals for small firms.”

FSB News Release
PR 2010 42 

Issue date: Tuesday 27 July 2010  

Reform maternity and paternity pay, says FSB  

FSB launches new flexible working report proposing major reforms to childcare and maternity leave 

The Government must reform statutory maternity and paternity pay to give small businesses certainty over employee’s family leave, the Federation of Small Businesses (FSB) said in a new report today.  

Under current rules, women are allowed to take 52 weeks leave, 39 weeks of these are paid on statutory maternity pay, and men can take two weeks paid paternity leave. Yet, while many women benefit from the full length of maternity leave in the UK, 37 per cent of lower paid workers tend to go back to work within six months, compared to 11 per cent of on higher pay. 

Research by the FSB shows that maternity and paternity leave is one of the most complicated issues in the employment field – half of small businesses rated maternity leave very complex to administer. 

Small firms do not have the HR departments that big businesses have to deal with the complex administration of maternity and paternity leave. While small firms are the most flexible employers, they find it difficult to plan and forecast when someone on maternity or paternity leave will return to work. 

In a new report ‘Flexible Working: small business solutions’, the FSB is calling on the Government to reform maternity and paternity leave by introducing a ‘flexible leave’ system to allow parents to choose their leave arrangements.   

They should receive the full entitlement to statutory maternity or paternity over the time they want off. For instance, if a mother wants four months maternity leave she should have that time off with the full pay in that time frame. 

This would help to instil confidence in the employer as to when their skilled workforce will be returning to work as well as helping clarify the confusing and burdensome systems currently in place. 

The FSB is also calling for the Coalition Government to put in place the following measures: 

• Promote all new posts in the public sector as flexible and part-time.
• Set out a national definition of flexible working to provide clarity to small businesses and employers.
• Create a childcare bond to enable businesses to provide sustainable childcare for families - under the current system only 18 per cent of nursery providers said they were certain they would still be operating in 2015.

 John Walker, National Chairman, Federation of Small Businesses, said: 

“Small businesses are known as the most flexible employers – often operating in a small team that runs like a tight-knit family. FSB research shows that 72 per cent of respondents have flexible working arrangements for their staff. Yet, laws surrounding maternity and paternity leave are complex and confusing to administer and can act as a barrier to small firms taking on new staff simply because they do not understand the burdensome system."   

“Family leave should be tailored to suit each individual – a one size fits all approach fails to adapt to those needs. Government must reform the way statutory pay is distributed to people taking maternity or paternity leave. Parents should be able to choose not only how long they take leave but how and when they receive the pay they are entitled to. In doing so small firms will have more clarity on when that invaluable and skilled member of staff will return to work.”