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Press Release

FSB warns Pensions Secretary to lay off small firms

24 March 2006

The Federation of Small Businesses (FSB) today reminded the Secretary of State for Pensions, the Rt Hon John Hutton MP, that proposals for compulsory 3% pensions contributions from businesses are unsustainable for small firms.

Mr Hutton was addressing the FSB National Annual Conference in Manchester today as the keynote speaker.

Larger businesses have existing pensions schemes but small firms would have to set the scheme up from scratch, administer it and pay into it. Such a burden would lead to many enterprises becoming unviable. With other regulatory and tax pressures this could well prove to be the straw that breaks the camel’s back for FSB members.

FSB members also asked the Secretary of State several searching questions on issues such as the Government’s £5 billion a year raid on private pensions funds and the inequity of public sector workers being able to retire at 60 while private sector staff will have to work till 67 or later.

Mike Cherry, FSB National Pensions Spokesman, said:

“We are grateful to the Secretary of State for addressing us at our conference today. We are pleased that he is aware that pensions is such an important issue and recognises that small firms will need special attention as we move forward.

“As Mr Hutton rightly said, small firms represent the engine room of the UK economy. It is essential to set our members free to grow and boost the nation’s coffers. Burdening them with an extra cost is not practical and nor is it in the nation’s interests.

“For that reason it is vital that the Government recognises that small firms are simply unable to survive if they are to be weighed down with a 3% tax on them to provide for pensions. Employees must be enabled to provide for their future and the Government must do more to restore confidence in pensions. As responsible employers, we will give employees every means to save. Forcing small firms to contribute is counter productive to the Government’s broader economic aims to boost UK business by focusing on supporting small firms.”



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Federation of Small Businesses

Federation of Small Businesses

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