All UK businesses will have to offer company pension schemes by the year 2016, the government has agreed. They can either offer their own company scheme or enrol staff into the National Employment Savings Trust (Nest).
This will result in between four million and eight million workers starting to contribute to a pension scheme for the first time.
Staff will have to earn at least £7,475 to be eligible.
Pensions minister Steve Webb said: “For the first time, employers will have to make contributions for eligible workers, ending decades of decline of membership in workplace pension schemes.”
Employers and employees will have to make a combined minimum of eight percent of income per year.
The Federation of Small Business (FSB) feels the move will place a large burden on small firms with a small workforce.
Mike Cherry of FSB said: “The cost and time spent on administrative work will damage micro firms- those with 10 employees or less.”
Employers will be given a three month period of grace to enrol staff on to a pension scheme, a move welcomed by the British Chamber of Commerce (BCC).
Dr Andrew Marshall of BCC said: “Thanks to the 12-week exemption, companies with a high turnover of staff or a large number of seasonal workers will not have to spend a lot of time and money enrolling employees into pensions that they do not intend to continue.”