Backing the Future

Backing the Future

Recognising the importance of small firms in shaping pensions policy

June 2025

Acknowledgements

This report was authored by Kristina Grinkina, Senior Policy Advisor for pensions at the Federation of Small Businesses (FSB). Special thanks to FSB’s policy, government affairs and media and communications teams, in particular: Anna Slater, Deputy Head of Media and Communications, and Tom Blenkinsop, Senior Government Affairs Advisor. Special thanks also to former colleagues Cosmo Gibson and Emelia Quist for their work on this report.

This report would not have been possible without the FSB members across the UK who participated in this research, generously taking the time out of running their small businesses to complete our survey, attend focus groups and participate in interviews.

The quantitative research was carried out by Verve – the market research agency responsible for administering the survey. The report was designed by Cactus Design Limited – a small business based in Wales.

Who we are

The Federation of Small Businesses (FSB) is the UK’s grassroots business organisation. We are a crossparty non-profit body that represents small business and self-employed members in every nation and region.

For over 50 years, we have been the authoritative voice on policy issues affecting the UK’s 5.5 million small businesses, micro businesses and the selfemployed. FSB is the UK’s largest business group and leading business campaigner, focused on achieving change which supports smaller businesses to grow and succeed.

We also provide our members with a wide range of vital business services, helping them to start, run, and grow successful businesses through high quality protection and support. This includes 24/7 legal support, financial expertise, training and events, debt

recovery and employment/HR advice – alongside a powerful voice heard by governments at all levels.

Our local, national and international campaigning helps shape policy decisions that have a direct impact on the day-to-day running of smaller businesses. We work for their interests through research and engagement with our members and by effective campaigning - influencing those in power through policy analysis, government affairs and, media and public relations activity.

Our policy and advocacy work starts with our expert team in Westminster, which focuses on UK and England policy issues, the UK Government, Parliament and the media. Further to this, our teams in Glasgow, Cardiff and Belfast work with governments, elected representatives and media in Scotland, Wales and Northern Ireland.

InfographicsPensions

79%

of small employers are concerned about the cost of employmentbut are still happy to contribute to their employees’ pensions

69%

of small employers say they understand autoenrolment well, while 31% do not

53%

of small employers say that one of the most challenging aspects of auto-enrolment is understanding the rules and what they need to do

34%

of small employers say they pay £500 or more a year for ongoing administration of auto-enrolment

24%

of small employers spend more than £500 a year for ongoing advice about auto-enrolment

37%

of employers who have staff enrolled in workplace pensions have never engaged with The Pensions Regulator (TPR)

38%

of employers say that they would recruit fewer workers if minimum employer contributions are raised from 3% to 6% over the next decade

20%

of small employers say that if the Government requires them to start contributing to pensions from the first £1 of earnings, they will have to reduce employer contributions to a minimum of 3%

30%

of small employers say their pension scheme provider shares clear information on the performance of their scheme, while 25% disagree

Foreword

Over the last decade, auto-enrolment has transformed the pensions landscape in the UK, aiming to provide workers with the security of retirement savings.

But for small employers, that journey has been anything but simple. It’s been fraught with challenges, confusing rules and high costs, although there have been many success stories, too. The ongoing issues small businesses face when it comes to providing workplace pensions cannot be ignored.

As auto-enrolment was rolled out in stages, small employers had to quickly adapt to new responsibilities, often with limited resources and little room for error. For many, that felt like a daunting task. In fact, more than half of small employers still consider it to be one of the biggest hurdles they face.

Despite these early struggles, attitudes towards auto-enrolment have shifted positively. Our research shows that the majority of small employers now agree that auto-enrolment is beneficial for both employees and society. This shift reflects a growing understanding of the system and its long-term value. Bringing in such a monumental change was always going to be difficult, which is why we asked the Government to start with the largest employers, which it did, and then move down through mediumsized and bigger small businesses in phases over a number of years - leaving the very smallest employers until last. This enabled more education, awareness, and financial planning - and embedded the programme culturally into UK enterprise before it was enforced. This is a model for public policy that should be used elsewhere.

However, small businesses still remain under financial strain and the cost of providing pensions continues to be a concern. Around a third of small employers report paying over £500 just to administer a scheme, alongside a similar amount for advice, adding a significant bureaucratic cost to running a business and creating jobs, on top of the central cost of providing contributions for their workers’ future retirement. Looking ahead, the proposed changes to the pension system could have a significant impact. With talk of the auto-enrolment age being lowered

and the earnings threshold being reduced, small employers are bracing for further increases in costs. Our research shows that small businesses continue to cite labour as one of the main sources of changing business costs, with 52 per cent of small businesses selecting this in our Small Business Index report for Q1 2025. This is why it is critical that the cumulative cost on employers is considered as a key component of any decisions. We would also urge that any further changes to auto-enrolment are planned over multiple years to allow small firms to prepare.

For many, part of the answer may lie in better support from Government and pension providers, helping them navigate the complexity of pension systems without being burdened by excessive red tape. The investment performance of pension funds is also key, as simply increasing contributions without looking at other factors which can have an impact on outcomes for savers can unnecessarily burden small businesses and their employees. After all, our research highlights that the level of financial and administrative burden often dictates small business buy-in, which is crucial for the success of the policy and improving outcomes for savers.

The findings in this report reveal that small businesses, while open to providing pensions for their employees, need more clarity and support to ensure they are equipped to do so effectively.

If policymakers want to secure the future of pensions in the UK, they must listen closely to the concerns of small employers and offer practical solutions that ease the burden on these businesses. Our recommendations offer a clear picture of where pensions policy needs to go.

Tina McKenzie FSB Chair, Policy and Advocacy

Key findings

For small employers that provide a workplace pension for their staff or intend to do so in the next 12 months, the most common pension schemes are:

• National Employment Savings Trust (NEST) (51%)

• Any other master trust e g Legal & General, Aviva (12%)

• People’s Pension (10%)

• Group Personal Pension (GPP) scheme (7%)

• Smart Pension (5%)

Small employers consider the following as the most important factors when choosing an autoenrolment scheme:

• Cost and admin burden of dealing with the scheme (64%)

• Cost of scheme to employees (42%)

• Brand and reputation of the scheme (39%)

• Track record of the scheme (25%)

• Investment policies of the scheme (14%)

Understanding of auto-enrolment and advice for small employers

• 69 per cent of small employers say that they understand auto-enrolment well, while 31 per cent do not

The most common sources of information, advice and support for choosing a pension scheme and managing responsibilities for small employers who responded to the survey are:

• Accountant (48%)

• Own research (27%)

• The Pensions Regulator (26%)

Small business experience of engagement with The Pensions Regulator (TPR):

• 40 per cent of employers who have staff on workplace pensions have not had any experience or engagement with TPR

• Out of 60 per cent of small employers that have engaged with TPR, 40 per cent say their engagement with TPR was straightforward, compared to 30 per cent who say it wasn’t

Main challenges for small employers with autoenrolment pensions

The aspects of auto-enrolment that small employers have found most challenging to date are:

• Understanding the rules and what they or the business needed to do (53%)

• Re-enrolling staff (42%)

• Communicating information about autoenrolment to their employees (24%)

• Selecting and setting up a qualifying workplace pension scheme (22%)

• Setting up / managing payroll software or systems (14%)

Small employers’ experience of engaging with their pension scheme providers:

• 36 per cent of small employers agree that it is easy to speak to someone if they have a query, while 17 per cent disagree

• 37 per cent of small employers agree that issues/queries were resolved quickly and efficiently, while 11 per cent disagree

• 30 per cent of small employers agree that their pension scheme provider shares clear information on the performance of the pension scheme, while 25 disagree

Financial costs associated with auto-enrolment for small employers

Cost of paying for advice/professional services on an ongoing basis:

• 52 per cent of small employers say it costs them up to £499 per year

• 24 per cent of small employers say it costs them £500 or more per year

Administration costs on an ongoing basis:

• 52 per cent of small employers say it costs them up to £499 per year

• 34 per cent of small employers say it costs them £500 or more per year

Views of small employers on future pensions reforms/proposals

• 45 per cent of small employers say that the Government’s proposal to reduce the autoenrolment age from 22 to 18 will have no impact on their business

• Out of the 55 per cent that say that the proposal is likely to result in action, the top reported actions are:

o Raise prices (22%)

o Take lower profits/absorb costs/limit my own compensation (21%)

o Recruit fewer workers (18%)

o Reduce employer pension contributions to the minimum of 3% (11%)

• 18 per cent of small employers say that the Government’s proposal for employer pension contributions to apply from the first £1 of earnings will have no impact on their business

• Out of 82 per cent that say that the proposal will have an impact, the top reported actions are:

o Raise prices (36%)

o Take lower profits/absorb costs/limit own compensation (32%)

o Recruit fewer workers (28%)

o Reduce pension contributions to a minimum of 3% for employers (19%)

• Eight per cent of small employers say that the proposal to increase minimum employer pension contributions from 3% to 6% over the next 10 years will have no impact on their business

• For those employers who would take action if contributions increase to 6%, the top reported actions are:

o Raise prices (52%)

o Recruit fewer workers (38%)

o Take lower profits/absorb costs/limit my own compensation (34%)

General attitude of small employers to autoenrolment

• 79 per cent of small employers are happy to contribute to their employees’ pensions, but are concerned about the cost of employment

• 62 per cent of small employers agree that auto-enrolment is good for their staff

• 62 per cent of small employers agree that auto-enrolment is good for society

• 74 per cent of small employers agree that it is right that employees should save into a workplace pension

• 55 per cent of small employers agree that they should have a role in choosing a pension scheme for their employees

• 58 per cent of small employers agree that it is right that employers contribute towards their employees’ workplace pension

Recommendations

The Government should:

• Publish an economic assessment of the impact on the labour market of recent and proposed changes to Government policy on employment This economic assessment should include the impact of increases to the National Living Wage and increases to the level of employer National Insurance contributions, and should also assess the prospective impacts of changes to the autoenrolment age and lower earnings limits The cumulative impact of Government policies on small employers and on labour market participation must be assessed before any further changes are implemented The Northern Ireland Executive should carry out a similar assessment in respect of its own rules

• Convene regulators, including The Pensions Regulator and the Financial Conduct Authority, and industry stakeholders, to simplify pension rules and provide clearer guidance for small employers, reducing complexity and unnecessary admin. This would be a pro-growth, pro-employment move

The Department for Work and Pensions (DWP) should:

• Include a review of the impact of provision of workplace pensions on small employers in Phase Two of the Pensions Review, and look to learn lessons from the previous staging of auto-enrolment duties, for improvement in any future expansion. In particular, DWP should consider the burden on small employers before any future proposals are implemented, including looking at financial costs of ongoing administration and advice, as well as payroll software integration and small business understanding of how to comply, as these are the key factors for securing business buy-in for any future policy

• Not consider implementing any increase in minimum workplace contributions for employers until the Pensions Review has taken place. The Pensions Review should include an assessment of the impact of workplace pensions on small employers and any impacts on participation in the labour market.

The Department for Work and Pensions (DWP) and HM Treasury (HMT) should:

• Review how pension scheme investment in the economy can increase investment in small businesses, either through direct investment, or indirectly through wider support measures. This should include measures to make the UK domestic market more attractive for investment but also to encourage investment in unlisted assets where risk-sharing allows In addition, learning from other nations and exploring the possibility of other models such as Collective Defined Contribution schemes in increasing investment returns and risk pooling would be beneficial.

The Pensions Regulator (TPR) should:

• Provide guidance and tools for small employers that are considering switching providers. This could include a step-by-step process for switching and specific guidance on what they should consider before doing so, as well as any risks involved This would help to equip small businesses to choose a new provider if the current one is not delivering to a good standard, and encourage schemes to be more competitive in the products and services that they provide

• Review engagement with small employers and identify areas for improvement. Our research shows that only 60 per cent of small employers have engaged with TPR, and out of those, 40 per cent have found

the engagement straightforward while 30 per cent have found the engagement not straightforward Therefore, reviewing engagement and identifying areas for improvement could also play a part in better small business engagement and improving small businesses’ understanding of pensions This could be done through collaboration with FSB

The Financial Conduct Authority (FCA) together with The Pensions Regulator and the Department for Work and Pensions (DWP) should:

• Take forward proposals to notify employers if schemes receive an amber or red rating under the Value for Money Framework, and not accept any business from new employers into such arrangements. This will help to ensure that small employers are aware of schemes’ performance and are unable to choose schemes that are unsuitable for their employees

• Encourage pension firms to collect data on metrics from employers as well as savers, as part of customer satisfaction. Small employers are not always able to get suitable external advice to help them choose the best pension scheme for their needs and the needs of their employees A similar framework to savers for data collection on user experience should be established by pension scheme providers to help provide information to businesses on the performance of pension schemes

The Department for Work and Pensions (DWP), together with The Pensions Regulator, should

• Introduce amendments to current rules on re-enrolment to allow notification of intention of re-enrolment to take place before employees are re-enrolled back into a scheme, to allow the opportunity to opt out

before any changes take effect. 42 per cent of small employers say that re-enrolment is one of the most challenging aspects of autoenrolment, in particular when employees have previously or consistently expressed their desire not to be enrolled in a pension scheme due to being under financial strain. Under the current rules, employees are notified of re-enrolment within six weeks of re-enrolment taking effect, by which point it is already too late to stop re-enrolment taking place if they do not want to be in a pension scheme, leaving them out of pocket Allowing notification of re-enrolment and the opportunity to opt out to take place before any changes take effect would still preserve the opt-out policy of auto-enrolment, and reduce the likelihood of any issues arising between small employers and their employees This means that the policy will still work on an optout basis and will not impact overall take-up, but instead it will just be more flexible to those who do not want to be auto-enrolled

The Department for Work and Pensions (DWP) and HM Treasury (HMT), together with industry, should:

• Not just consider the level of contributions when assessing pensions adequacy, but also other factors which impact outcomes for savers. For example, pensions adequacy assessment should take into consideration the overall performance of pension schemes, investment returns, retirement age and starting age for contributions, as well as the final retirement income needed, amongst any other factors that can influence outcomes for savers Simply looking at increasing contributions could place burdens on small employers and their employees, particularly those on lower income, meaning that a onesize-fits-all approach is unlikely to be suitable.

Auto-enrolment journey for small employers over the last 10 years

Auto-enrolment was set up to address declining workplace pension provision and improve retirement savings. It was introduced in the Pensions Act 2008; roll-out began with larger businesses in 2012 and was staged by size through to 2017 for smaller businesses.1 The staging of auto-enrolment responsibilities meant that smaller businesses had more time to prepare and implement any changes needed to comply with requirements.

Concerns around adequate support for small employers in implementing auto-enrolment have been raised a number of times since the policy was introduced. The 2015-16 Work and Pensions Committee inquiry highlighted an acknowledgement from the Department of Work and Pensions (DWP) that the extension of automatic enrolment responsibilities to small employers will be the most challenging phase of implementation, given that small employers do not have as many resources as their large counterparts.2 Our research supports this and shows that many small employers found the initial implementation period challenging, in terms of understanding their auto-enrolment responsibilities and having access to relevant guidance and information, as well as dedicating additional resources to compliance.

More generally, auto-enrolment has encouraged many to save for their pension – with a reported ten-fold increase in total membership of defined contribution schemes from 2.1 million in 2011 to 21 million in 2019.3 DWP research shows that overall, 88 per cent of eligible employees were participating in a workplace pension in 2023. However, this is not the same across all groups: for example, participation decreases to 57 per cent for employees of micro employers in the private sector.4 The research also shows that workplace pension participation increases with annual earning levels.5 The number of eligible employees that are stopping saving has also been increasing slightly over time, with particular volatility around significant events such as the COVID-19 pandemic. Despite this, in recent years the opt-out rate has largely remained stable, with around one in ten eligible employees opting out.

Changing attitudes to auto-enrolment

FSB research highlights that small employers’ attitudes towards auto-enrolment have shown a positive trajectory over time, which is likely due to initial implementation challenges subsiding, and to an increased understanding of responsibilities. Our research shows that almost two-thirds (62%) of small employers agree that auto-enrolment is good for their staff, compared to around two-fifths (41%) who said the same in 2015. Similarly, 62 per cent of small employers agree that auto-enrolment is good for society, which is a slight increase on the 58 per cent who said the same in 2015.

Small business perceptions about the benefits of workplace pensions for staff and society as a

whole are influenced by how well they understand retirement savings and employer duties. Interestingly, our research shows that small employers who understand auto-enrolment and what they need to do to comply well are more likely to agree that auto-enrolment is good for their staff (67%) than those who do not understand it well (51%). A similar trend is also evident for those who say that auto-enrolment is good for society, whereby small employers who understand auto-enrolment and what they need to do to comply are more likely to agree that it is good for society (67%) than those who do not understand what they need to do to comply well (51%).

Figure 1: Proportion of small employers that agree and disagree with the below statements in 2015 and 2024

Source: FSB workplace pensions survey 2024

“I

would say it’s definitely got easier over time and the perception of it has got a lot easier over time as well, but the pension thing as a whole was a nightmare at the beginning. It’s easier now.”

FSB member, Professional services, South West England

“I would say it’s [auto-enrolment] probably a good thing for the country because we have got people saving into something for their retirement, and probably as a nation we don’t save enough towards it.”

FSB member, Wholesale and retail, North West England

Opinions of small employers slightly diverge around whether the responsibility for making contributions to workplace pensions should lie with the employer or with employees. Our research shows that almost three-quarters (74%) of small employers say that it is right that employees should save into a workplace pension, but in comparison just over half (58%) say that it is right that employers themselves should contribute towards those same pensions. This is likely due to the financial strain that many small employers are under. However, this perception has considerably improved since 2015, where 58 per cent of small employers agreed that employees should contribute to their workplace pension, and only around two in five (41%) agreed that employers should contribute to a workplace pension. It is clear that, while perceptions have broadly followed a positive trajectory, there is still a disparity in terms of levels of support. Our research shows that views can be in part explained by the impact of the policy on the employers themselves.

Previous DWP research found that while smaller employers see pensions as a good thing, the impact on them as employers, particularly in terms of the costs and burdens associated with providing workplace pensions, have often influenced their views on auto-enrolment.6 FSB’s own research also found that the cost of ongoing administration of auto-enrolment is a contributing factor to such views.

Figure 2: Proportion of small employers that agree employers should contribute to their employees’ pension schemes, split by the cost of administration and management of the schemes

Source: FSB Workplace pensions survey 2024

£500 or more

Up to £499

Small employers are more likely to agree that they should contribute to an employees’ workplace pension if the cost of ongoing administration is £499 or less per year (61%) than where the cost of ongoing administration is £500 or more per year (56%). A similar trend is also observed for small employers that report a higher cost of setting up a workplace pension scheme, where small employers that say that the cost of setting up a pension scheme was up to £499 per year are more likely (61%) to agree that employers should contribute towards their employees’ pension scheme than those who say that it cost them £500 or more per year (51%).

There is also a stark difference in business perceptions when the cost of paying for advice and/ or professional services is considered. This is likely because the complexity of pensions means that small employers regard such advice as a substantial and mandatory additional component of the cost of managing workplace pensions. Small employers

in our research who report lower costs for advice, of up to £499 per year, were more likely (63%) to support contributing to employees’ pension schemes than those who say that it cost them £500 or more per year (50%). These findings show that any future proposals from the Government in this space need to consider the impact on small employers, if it wants to see business buy-in and potentially improve outcomes for pension savers. As 60 per cent of private sector employees are employed by SMEs, it is important to ensure that pension rules do not discourage greater expansion for small businesses that employ staff or for those that are considering employing staff in the future. Similarly, any substantial mandatory increases in future contribution rates may also discourage employment if they are not effectively managed, and if consideration is not given to the wider economic environment and challenges that small businesses experience in relation to employment.

Small business use of auto-enrolment schemes

In order for an employee to qualify for pensions auto-enrolment they need to meet certain criteria, including being aged between 22 and the state pension age, and earning over £10,000 per year. The Government is required to review the earnings trigger on an annual basis, and the latest review in January 2025 concluded that the earnings trigger is to remain frozen at £10,000, with the qualifying earnings band lower limit frozen at £6,240 and the upper limit at £50,270.7 This means that any employee earning over £10,000 is required to be enrolled into a workplace pension, and the contributions are made on earnings between the upper and lower earnings limits. However, with the most recent increase of the National Living Wage to £12.21 per hour in April 2025, it is likely that many more employees have become eligible for pensions auto-enrolment.8

Of small employers that have at least one person enrolled in a pension scheme or who plan to enrol someone in the next 12 months, 51 per cent say that they use, or plan to use, the National Employment Savings Trust (NEST) as their pension scheme provider, followed by 12 per cent using any other master trust (e.g. Legal and General, Aviva), and the People’s Pension (10%). For the 4 per cent of small employers that selected other options in our research, responses varied between small self-administered scheme (SSAS) pensions, and a variety of different trusts such as the Workers Pension Trust, Salvus Master Trust, and the Creative Pensions Trust.

Figure 3: Main workplace pension schemes that small employers use

Source: FSB workplace pensions survey 2024

The National Employment Savings Trust (NEST) was set up in 2008 by the Government to make automatic enrolment as simple as possible, and serve those that had difficulty with getting provision from pension providers due to their complex nature, or high maintenance and administration fees. NEST has a Public Service Obligation which means that it is required to accept any employer, to fulfil its autoenrolment obligations. The latest review of NEST in 2022 found that it continues to meet its objectives and complement the market by providing access for those that would otherwise be poorly served, and that the majority of employers that have accessed NEST are small and medium sized businesses.9

Our research shows that just over half (55%) of small employers agree that they should have a role in choosing a pension scheme for their employees. Unsurprisingly, small employers with 10 or more employees are more likely to agree (60%) than those with one to nine employees (50%) that they should

Source: FSB workplace pensions survey 2024

The cost and admin burden of dealing with the scheme

The cost of the scheme to employees, i.e. the fees charged by the scheme

The investment policies of the scheme, such as their environmental, social and governance approach

The track record of the scheme, i.e. its past investment performance

The brand and reputation of the scheme

Other aspects of the service offered by the provider

None of the above / not applicable

have a role. Similarly, small employers with a higher annual turnover of £200,000 or more are more likely to agree (55%) than those with a turnover of less than £200,000 (45%).

Despite the complex nature of pensions and the associated advice needed to help navigate them, small employers are not complacent in relation to choosing their workplace pension schemes. Our research shows that there are a number of factors that small employers consider when choosing a pension scheme for auto-enrolment. However, it is not surprising that the cost and administration burdens of the schemes are at the top of their list of concerns (64%); this increases to 72 per cent for the wholesale and retail sector and 73 per cent for the professional, scientific and technical activities sector. Other common factors that influence small employers when choosing a scheme are the cost of the scheme to employees (42%) and the brand and reputation of the scheme (39%).

Figure 4: Factors that small employers consider when choosing an auto-enrolment scheme

Small employers with one to nine employees are more likely to perceive the cost and admin burden of a scheme as important (66%) than those with 10 employees or more (59%). Similarly, small employers with an annual turnover of £500,000 or less are more likely to consider the cost and admin of the scheme as more important when choosing a scheme (68%) than those with an annual turnover of £500,000 or more (59%). However, those with a higher annual turnover of £500,000 or more are more likely to consider the cost of the scheme to employees as more important (46%) than those with an annual turnover of £500,000 or less (39%).

Other reasons that small employers cited as important when choosing a workplace pension scheme are around the ease of setting up the scheme, including integration with payroll software, the flexibility of schemes e.g. being able to transfer out, and the reliability and security of schemes. Some also mentioned the scheme’s ability to support different types of employees and employment contracts, such as those on variable or zero-hours contracts.

Concerns around the choice of pension schemes were also raised during the 2015-16 Work and Pensions Committee inquiry.10 During the inquiry, it was noted that The Pensions Regulator (TPR) highlighted that choosing the appropriate workplace pension scheme will be one of the most significant challenges for smaller employers, and concerns were also raised around employer liability when choosing schemes and the scheme’s subsequent performance. The committee asked DWP to clarify its position. In the Government’s response to the inquiry, DWP said: “Provided an employer has automatically enrolled their eligible staff into a qualifying scheme and declared their compliance with TPR, their legal duties under automatic enrolment legislation in relation to scheme choice are met.”11 It added: “Automatic enrolment legislation does not impose any obligation on the employer to ensure a certain level of investment returns for their employees.”12

In November 2024, as part of a consultation, the Government explored whether there should be a duty on employers to consider value in pension scheme selection.13 The final report published in May 2025 confirmed that such a duty would not be taken forward due to limited evidence supporting objectives of improving outcomes for savers.14

FSB welcomes the outcome of the review in this regard and believes that the focus should remain on pensions providers as those responsible for the value and performance of pension funds, as well as savers themselves, given that they possess knowledge and expertise to do so.

The ability to integrate workplace payroll systems and processes with auto-enrolment schemes plays a significant part in their ease of use and consequently has a direct impact on the resources that small employers are able to dedicate to compliance. Our research shows that 41 per cent of small employers outsource their payroll, either to a bookkeeper/ accountant or a payroll provider or bureau, while 37 per cent of small employers use payroll software which they manage themselves. Around one in 10 (9%) of small employers say that they use HMRC Basic PAYE Tools for their payroll. However, while the tools were designed for micro businesses, they do not help to calculate who to enrol nor do they help to calculate pension contributions, and therefore do not support auto-enrolment. The Work and Pensions Committee 2015-16 inquiry on automatic enrolment recommended that DWP work with HMRC to expand Basic PAYE Tools to support small employers in meeting their automatic obligations. The Committee stressed that “the decision not to develop the HMRC Basic PAYE Tools (BPT) to support automatic enrolment was a mistake.”15 FSB supports this and believes that consideration should be given to extending its use to support auto-enrolment, given its potential to support businesses to expand without adding additional and unnecessary burdens.

Out of small employers that selected ‘other’, some indicated that they do the payroll themselves, others have in-house bookkeepers or accountants, and some took the opportunity to name specific software which they use to manage their payroll such as QuickBooks Online, or Xero.

Only 5 per cent of small employers say that they have ever switched pension scheme providers, and 7 per cent say that they have considered it but decided not to. Out of small employers that considered switching scheme providers but decided not to, many say that this was either because it was too difficult to switch, or that they heard that it was too difficult to switch. Small employers also cite a lack of information and/or clear data not being available for schemes, as well as unreasonable costs for management of schemes, particularly for those with fewer than 10 employees where the costs can be especially disproportionate. This aligns with research conducted by DWP about employer perspectives on automatic enrolment, which found that employers

rarely switched providers as they felt that the process was too difficult.16 The same research found that those that did switch mainly did it because of dissatisfaction with the customer service of their former scheme.

FSB’s own research, based on small employers’ interactions with their current pension scheme providers over the past year, suggests that some small employers also experience difficulties with their providers. While just under a third (30%) of small employers say that their pension scheme provider shares clear information on the performance of their pension, a quarter (25%) of small employers say that their pension scheme provider does not. Almost two in five (37%) small employers say that any issues or queries are resolved swiftly and efficiently with their pension providers, whereas around one in ten (11%) disagree. Similarly, almost two in five say that it is easy to speak to someone if they have a query but around one in seven (17%) disagree.

know / not applicable

Figure 5: Small business use of payroll for workplace payroll

Source: FSB workplace pensions survey 2024

Figure 6: Small employers’ views on interactions with pension scheme providers

Source: FSB workplace pensions survey 2024

Recommendations

• The Pensions Regulator (TPR) should provide guidance and tools for small employers that are considering switching providers. This could include a step-by-step process for switching and specific guidance on what they should consider before doing so, as well as any risks involved. At present, TPR only provides information on what to look for in a pension scheme as a new employer, rather than how to go about switching pension scheme providers. This would also help to equip small businesses to choose a new provider if the current one is not delivering to a good standard, and encourage schemes to be more competitive in the products and services that they provide.

• The Financial Conduct Authority (FCA) should take forward proposals to notify employers if schemes receive an amber or red rating under the Value for Money Framework, and not accept any business from new employers into such arrangements. This will help to ensure that small employers are aware of schemes’ performance and are unable to choose schemes that are unsuitable for their employees.

• The Financial Conduct Authority (FCA) should encourage pension firms to collect data on metrics from employers as well as savers, as part of customer satisfaction. Employer experience must not be forgotten if they are expected to continue to set up and administer workplace pension schemes. Small employers are not always able to get suitable external advice to help them choose the best pension scheme for their needs and the needs of their employees. A similar framework to savers for data collection on user experience should be established by pension scheme providers to help provide information to businesses on the performance of pension schemes. This would enable small employers to make better choices regarding pension schemes and therefore contribute to improved consumer choice and better pension outcomes for individuals.

Understanding of autoenrolment, and sources of advice and information on workplace pensions

Just over two-thirds (69%) of small employers say that they understand auto-enrolment and what they need to do to comply well, while around a third (31%) report that they do not understand autoenrolment well. The overall level of understanding has somewhat improved since FSB’s last survey on auto-enrolment in 2015, when 55 per cent of small employers said that they understood their responsibilities well, and 45 per cent said that they did not understand it well.

Our research shows that age, size and turnover of the business play a role in understanding autoenrolment responsibilities, which could be due to the resources available as well as experience in navigating new and existing requirements. Small employers with 10 or more employees are more likely to say that they understand auto-enrolment and what they need to do to comply well (78%) than those with one to nine employees (66%). Similarly, businesses that have been established for longer are more likely to say that they understand their responsibilities well (10-19 years – 66%/ 20-49 years 76%) than those who have been established for 9 years or less (54%).

Finally, our research shows that annual turnover also plays a part in understanding of responsibilities relating to auto-enrolment pensions, as small employers with an annual turnover of £200,000 or more are more likely to say that they understand their responsibilities well (73%) than those with a turnover of £200,000 or less (60%). This could be because of availability of resources and therefore the ability to access external advice, or hire those who can help them understand and comply with requirements. Small employers, and particularly micro businesses, are unlikely to have their own HR departments or pensions advisors to help them with information and compliance in-house. Therefore, there is still much more progress to be made by the Government and regulators to support small business understanding of workplace pensions and help them to manage their responsibilities under auto-enrolment.

Figure 7: Proportion of small employers reporting how well they understand auto-enrolment and what they need to do to comply

Source: FSB workplace pensions survey 2024

Our research shows that small businesses that do not understand auto-enrolment and what they need to comply well are much more likely to struggle with managing their employer duties under autoenrolment (37%) than those who understand what they need to do well (11%). Obtaining information from a reliable source is one way to improve

understanding and ease the compliance burden associated with auto-enrolment obligations. Our research shows that the most common sources of information for choosing pension schemes and managing responsibilities for small business employers are their accountant (48%), own research (27%), and The Pensions Regulator (26%).

Figure 8: Sources of information, advice and support for in relation to managing responsibilities as an employer

Source: FSB workplace pensions survey 2024

Other employer(s) Other trade bodies

Employee benefit consultant

Other, please specify Solicitor Friends or family

None of the above / not applicable Don’t know

Businesses with a higher turnover of £200,000 or more were more likely (51%) to use an accountant than those with a turnover of £200,000 or less (41%). This could be due to costs associated with hiring an accountant or the more complex needs of businesses as they grow and increase their number of employees.

Some small business owners in our research highlighted the pressure they face, compared to larger ones, when seeking advice on pensions and engaging with employees.

“There

isn’t a good body of advice, particularly for smaller businesses where the workload might fall on the bookkeeper or might fall on the financial director of the business to positively instil the benefit of a pension system for employees. For larger companies that have HR departments, they’re fully equipped for it. I mean they they’re fully equipped to not only administer it, but also communicate the benefits for those that can’t see the benefit.”

FSB member, Brand design, South East England

The Pensions Regulator (TPR) provides advice and information to help small employers comply with their responsibilities, and ensures that pension schemes are run appropriately. TPR also has a role to play in helping to disseminate information in relation to pension schemes and therefore has a role in improving small business understanding of responsibilities in relation to pensions. Our research shows that three fifths (60%) of small employers have had some form of engagement with TPR. However, out of those, two fifths (40%) say that they found the engagement straightforward, while 30 per cent say that the engagement was not straightforward.

Small employers’ ability to understand autoenrolment is critical not only for making compliance less resource-intensive, but also to signpost

employees to relevant information and advice, and foster employee engagement in this space. Research by DWP and the Government Social Research Profession found that employers can be an important asset in promoting engagement among employees due to being a trusted source.17 Our research shows that the most common ways in which small employers support their staff in helping them to understand pensions and retirement include referring them to information available from their pension provider (44%), suggesting that they take independent financial advice (39%), and helping them understand their options for themselves (25%). 20 per cent of small employers say that they do not get involved at all.

Figure 9: Small employers’ experience of engagement with TPR, through its website and communications, or direct contact via e-mail, letter, phone or in-person

Source: FSB workplace pensions survey 2024

For the 2 per cent of small employers that cite other options for supporting their staff, the majority say that they provide access to an independent financial adviser, and others say they try to help employees themselves, either one-to-one or through discussions within their teams in the workplace.

Our research shows that small employers are somewhat influenced by their source of advice in relation to pensions, and that this is then reflected in the advice that they provide to their employees. Small employers in our survey that refer their staff to their auto-enrolment pensions provider for pensions advice are more likely to get their own information from either FSB (52%) or The Pensions Regulator (54%) than their accountant (44%), whereas small employers that suggest that their staff get independent financial advice are more likely to get their own advice from a financial advisor (63%) than The Pensions Regulator (47%) or an accountant (46%).

Recommendation

• The Pensions Regulator should review engagement with small employers and identify areas for improvement. Our research shows that only 60 per cent of small employers have engaged with TPR, and out of those, 40 per cent have found the engagement straightforward, while 30 per cent have found the engagement not straightforward. Therefore, reviewing engagement and identifying areas for improvement could also play a part in better small business engagement and improving small businesses’ understanding of pensions. This could be done through collaboration with FSB.

Figure 10: Small business support for employees to help them understand pensions

Source: FSB workplace pensions survey 2024

Suggest they take independent financial advice

I try to help them understand their options myself

I don’t get involved

Direct my staff to Pension Wise

Suggest they go to Citizens Advice

My HR team provides information on pensions

Don’t know / not applicable

Costs and challenges of autoenrolment for small employers

The most challenging aspects of auto-enrolment

Small employers report experiencing several challenges when meeting their obligations under auto-enrolment, including through increasing financial pressures and the complex nature of pensions as a financial product. The initial setup of auto-enrolment and understanding how responsibilities apply to the business can put a considerable strain on resources, particularly for smaller businesses for whom managing compliance with auto-enrolment is only a very small part of their employer duties.

Our research shows that almost two fifths (38%) of small employers say that it was easy to set up

Source: FSB workplace pensions survey 2024

an auto-enrolment scheme, and nearly one in eight (12%) small employers say it was difficult to set up an auto-enrolment scheme. For those that say the process was difficult, the most common reasons were that it was complicated and time-consuming to navigate, and small business owners felt that they needed to access specialised advice to help them understand their obligations due to the complexity of instructions, particularly in terms of the language and jargon used. Given the long-term financial implications, small business owners can sometimes also fear repercussions for accidental wrongdoing.

Don’t know / not applicable / can’t remember

Figure 11: Small business views on how easy it was to set up an auto-enrolment scheme

“Whenever I had new staff starting, that did faze me a little bit at first because we’d had a company come in to do the initial setup and everything, but I think particularly as a micro business, once you get thrown in at the deep end and you don’t really have anybody to ask, you just have to take as long as it takes to plough through all the guidance and help sheets and everything else and work it out. And as with everything, once you’ve done it a couple of times, it does get that little bit easier. But it really was a sledgehammer to crack a nut. You know, the amount of stress it caused. I think if you’re like the Amazons or the Tescos of this world and you’ve got teams of lawyers, that sort of thing just isn’t going to bother you. But when it’s all on one person’s head to try and wade through the massive amounts of legality and formality and everything, genuine mistakes are made. I mean, I know I made quite a few mistakes and had to go to NEST and ask for assistance. The whole thing cost our business an awful lot of money in terms of my time, because over the years, I’ve probably spent weeks doing pension things.”

FSB member, Product design company, South West England

When asked to select their top three challenges, our research shows that the aspects of auto-enrolment that small employers find most challenging are understanding the rules and what they need to do (53%), re-enrolling staff (42%), and communicating information about auto-enrolment to staff (24%). For small employers that selected the ‘other’ category (3%), key concerns are around dealing with their pension scheme provider, including lack of support, and difficulties around pension scheme providers not being able to process contributions appropriately, particularly for hourly paid staff where contributions vary each month. Some small employers say that they did not experience many challenges due to their accountants dealing with the majority of the work towards their compliance in relation to workplace pensions.

Figure 12: Aspects of auto-enrolment process that small employers found most challenging to date

Source: FSB workplace pensions survey 2024

Understanding the rules and what I / my business needed to do

Re-enrolling staff

Communicating information about auto-enrolment to my employees

Selecting and setting up a qualifying workplace pension scheme

Setting up / managing my payroll software or systems

Assessing my workforce to see who I need to automatically enrol

Other Automatically enrolling staff Using “postponement”

None of the above / not applicable

Re-enrolling staff is one of the most challenging aspects of auto-enrolment requirements for more than two-fifths (42%) of small employers, with a further 12 per cent saying that assessing their workforce to see who they need to auto-enrol was most challenging. As part of their auto-enrolment duties employers are required to re-enrol qualifying staff that opted out of workplace pensions every three years18, which includes sending a letter to their employees within six weeks to inform them that they have been re-enrolled, so that they are able to reconsider their position. Small employers in our research cited difficulties around re-enrolling staff, in particular in relation to the administrative burden, and difficulties in re-enrolling those that did not wish to be enrolled, particularly when under financial strain. Some small employers say that this has resulted in them having to deal with employee complaints, particularly when employees have previously made their views known, and in some cases even having to issue a pay advance to staff, in order to help them until they are refunded their contributions.

“On auto-enrolment, I would say when it first came in, I remember it being an

absolute nightmare for us,

but I have to

say now it’s relatively straightforward and it works. It’s not too much of a problem, and so,

I

don’t have too many concerns. Probably the biggest hassle is, I think, come August we’ve got to reload everybody back into the system and that’s always a bit of a pain. But otherwise on a day-to-day basis, it’s not a problem.”

FSB member, Laundry/dry cleaning services, South East England

“It was a challenge setting it up, but we find it OK now. The three-year thing [re-enrolment] is a bit of a pain, but I’ve only got, I think, actually only three staff that have opted out. I would say [auto-enrolment] is probably a good thing for the country because we have got people saving into something for their retirement, and probably as a nation, we don’t save enough towards it.”

FSB member, Wholesale and retail, North West England

Around one in seven (14%) small employers cited setting up and managing payroll software or systems as one of their biggest challenges in autoenrolment. Outsourcing payroll functions is one of the ways to mitigate some of the administrative burden associated with auto-enrolment; however, for those that are not able to outsource, either due to associated costs or other reasons, it is important that auto-enrolment processes are well-integrated with their payroll system so that it is easier to comply. Our research shows that just over half (54%) of small employers agree that their auto-enrolment processes are well-integrated with their payroll system, and just under one in six (16%) of small employers disagree. Our research shows that small employers that outsource their payroll either to a payroll provider, bookkeeper, or accountant, are more likely to say that their auto-enrolment processes are well-integrated with their payroll system (54%) than those that pay for and manage the payroll software themselves (39%).

Source: FSB workplace pensions survey 2024

know / not

Figure 13: Proportion of small employers that agree that auto-enrolment processes are well-integrated with their payroll system

“I didn’t take on Nest and [software provider] with a view to making pensions and payrolls easier. As it turns out, because the two of them collaborate, it really is very, very easy. So, living with it is very simple.”

FSB member, Professional services, South West England

“I use [software provider] as well, but unfortunately, I’m with [a pension provider]. We started the plan there 26 years ago and they don’t speak [between them] at all. So, I work on a series of spreadsheets every month. I work out all the overtimes and whatever people have done, put in the spreadsheet and then I have to change my submission to [pension provider] every month, so it’s quite labour-intensive and you’ve got to get it right, that’s the problem – you can’t be wrong by a couple of pounds. It’s got to be spot on to the penny. So, it takes probably three or four hours of my time every month, which is time I could be doing other things.”

FSB member, Education and training, Wales

Administrative cost of auto-enrolment on small employers (excluding employer contributions)

Employment and labour costs form a significant proportion of a small business’s costs. FSB’s Small Business Index (SBI) for Q1 2025 shows that 85 per cent of small businesses report increases in operating costs, with labour costs being a close second to utilities in terms of the biggest cost drivers. The same research also found that nearly a quarter (23%) of small businesses say that their costs have increased by more than 10 per cent compared with the same period a year ago, and a fifth (21%) say that they had to reduce their workforce over Q1. This is a particularly stark comparison to the 8 per cent of small businesses that saw an increase in staff over the same quarter.

Our research also shows that over the years, the proportion of SBI respondents citing labour as the main cause of changing business costs has been increasing (with the exception of a slight decrease between 2019 and 2020 due to the impact of the pandemic), and given rises in National Insurance Contributions (NICs) and the National Living Wage (NLW) in April 2025, this trajectory is likely to continue this year. Over half (53%) of SBI respondents cited labour as the main cause of changing business costs in 2024.19

Figure 14: Proportion of SBI respondents citing labour as the main cause of changing business costs year on year 2019-2024

Source: FSB Small Business Index

The administrative costs associated with automatic enrolment can also be substantial for many smaller employers and therefore have the potential to deter them from expanding and growing their business. When automatic enrolment was first introduced, initial set-up costs were a significant concern. Our research shows that half (50%) of small employers say that the cost of setting up a pension scheme is less than £500, while a fifth (21%) say that it cost them £500 or more per year. The Pensions Regulator’s own estimate of the set-up costs is around £0-£500.20 However, our research shows that this largely varies by business size, and small employers with 10 or more employees are twice as likely to say that it cost them £500 or more to set up (35%) than those with one to nine employees (17%). However, while set up costs can be substantial, the ongoing cost of administration of auto-enrolment should not be overlooked either. Over half of small employers (52%) say that ongoing administration costs them up to £499 per year, and a further 34 per cent say that it costs them more than £500 per year. Small employers that use paid-for payroll software that they manage themselves are more likely to say that administration costs them £500 or more a year (39%) than those who outsource their payroll (32%). This highlights the need for schemes to be as simple to run for businesses as possible, particularly if they are small, as they have limited resources available for year-on-year administration.

“You

know, if you have staff who leave, come and go … you’re constantly changing things all the time. Almost every month. I’ve got a spreadsheet which I have to change if somebody gets overtime. It’s just an awful lot of work that’s suddenly dumped onto our shoulders again, which won’t go away obviously, as it’s here to stay but it’s yet another thing that drags vital capacity from business owners.”

FSB member, Education and training, Wales

Figure 15: Administrative financial cost of auto-enrolment for small employers per year

Source: FSB workplace pensions survey 2024

Cost of upgrading payroll software

Cost of paying for advice / professional services on an ongoing basis

Administration costs on an ongoing basis (i.e. the cost of your time / maintaining the running of your workplace pension)

Cost of setting up a pension scheme Up to

The ongoing cost of advice or professional services, and cost of upgrading software are also having an impact on small employers. More than half (52%) of small employers say that it costs them up to £499 per year, and around a quarter (24%) say that the cost of paying for advice or professional services on an ongoing basis exceeds £500 per year. Small employers who say that they get their advice from The Pensions Regulator (59%) or a financial adviser (57%) are more likely to say that it costs them up to £499 per year than those who get their advice from an accountant (50%).

Don't know/not applicable

Almost half (46%) of small employers say that it costs them up to £499 per year to upgrade payroll software, and 15 per cent say that it costs them £500 or more per year. Small employers that use paid-for payroll software that they manage themselves are more likely to say that it costs them up to £499 to upgrade it (61%) than those who outsource their payroll to an accountant or a bookkeeper (34%).

“As a micro business in a very small place, I speak to an awful lot of other business owners and the feedback that I’m constantly getting is ‘I simply cannot afford to be an employer’, and that is a real problem because if I’m suddenly told ‘I’m sorry, but your payroll bill is going up by 3% for this, 4% for that, 10% for this’, then I really do have to turn around and think to myself, well, I can’t put all of that cost on to my clients. My clients will simply go elsewhere or would not bother doing whatever they were going to do and employing us in the first place. Where is that money going to come from and at what point does an employer finally turn around and say, do you know what? It’s not worth my time anymore. Not worth my time. Not worth my effort. I can’t do it. You know I really do think the Government have to have it pointed out to them that the amount of GDP that small businesses bring in is vast. But if you make it so difficult and so expensive for those small businesses to be employers, we’ll all lose in the long run.”

FSB member, Professional services, South West England

Recommendation

• The Department for Work and Pensions, together with The Pensions Regulator, should introduce amendments to current rules on re-enrolment to allow notification of intention of re-enrolment to take place before employees are re-enrolled back into a scheme, to allow an opportunity to opt out before any changes take effect. 42 per cent of small employers say that re-enrolment is one of the most challenging aspects of autoenrolment, in particular when employees have previously or consistently expressed their desire not to be enrolled in a pension scheme due to being under financial strain. Under the current rules, employees are notified of re-enrolment within six weeks of re-enrolment taking effect, by which point it is already too late to stop re-enrolment taking place if they do not want to be in a pension scheme, leaving them out of pocket. Allowing notification of re-enrolment and an opportunity to opt out to take place before any changes take effect would still preserve the opt-out policy of auto-enrolment, and still reduce the likelihood of any issues arising between small employers and their employees. This means that the policy will still work on an opt-out basis and will not impact overall take-up, but instead it will just be more flexible to those who do not want to be autoenrolled.

Future proposals and challenges for small employers with auto-enrolment pensions Government proposals from the 2017 pensions review

It has been widely acknowledged that automatic enrolment has encouraged saving for retirement. However, since the initial implementation, the focus has slowly shifted to the expansion of autoenrolment to include greater numbers of workers. The Department for Work and Pensions (DWP) review of auto-enrolment published in 201721 highlighted that the current contribution level of 8 per cent is unlikely to give many the retirement that they would like and that DWP would like to do more to encourage young people, as well as self-employed and part time workers, to save for retirement. The Government proposed to lower the age threshold for automatic enrolment from 22 to 18, and remove the lower earnings threshold so that calculations can be made from the first pound of earnings. This would mean that many more employees with lower earnings and multiple jobs would be in scope of auto-enrolment, and therefore contributing to their retirement savings.

Small employers would be substantially affected. If these proposals are taken forward, on top of the increases in the National Living Wage (NLW) and National Insurance contributions (NICs) that were introduced in April 2025, then the costs could become significantly prohibitive. For example, a typical small business with six full-time employees will see its employment costs rise by an additional

£689 per year from NICs and NLW increases alone, and a business with nine employees would see that cost rise by £3,784 per year. In addition, the proposed pensions reforms taken forward, and those businesses’ employees are full-time and are eligible to make contributions from the first £1 of earnings, then based on the current lower earnings threshold of £6,240 being completely lowered and the minimum employer contribution remaining at 3 per cent, a small business would need to pay an additional £187.20 per employee for pension contributions. This means that a business with six employees would need to pay an additional £1,123.20 in pension contributions per year and a business with nine employees would need to pay £1,684.80 on top of the additional NICs and wage costs per year.

Our research shows that just over half (55%) of small employers say that a reduction in the minimum age for auto-enrolment from 22 to 18 would cause them to take action in response to this change, while 45 per cent say that this would not have an impact on their business. Out of those small employers that say that it will cause them to take action, the top actions reported are to raise prices (22%), take lower profits/ absorb costs (21%), recruit fewer workers (18%), and cancel/scale down plans for investment (13%).

Only 7 per cent say that the change will make them improve efficiency and increase productivity, and 3 per cent say that they will invest in machinery/ automate certain processes. Small employers with 10 or more employees are more likely to say that these proposals will have an impact (66%) than those with one to nine employees (53%). This could be because those with a greater number of employees are more likely to employ workers across many demographics, and therefore more likely to be affected by the changes.

In terms of sectoral differences, those employing staff in the wholesale and retail sector were more

likely to say that they would take action (62%) in response to the reduction of age qualifying for auto-enrolment than those in professional, scientific and technical activities (45%). Office for National Statistics (ONS) data shows that young people aged 16 to 24 account for one in every eight people working in retail.22 Therefore, the sectoral difference could be because there is a high proportion of young people working in retail, and therefore there will be a greater cost to businesses working in this sector.

Figure 16: Actions that small employers would take in response to the proposal to reduce the minimum age for auto-enrolment contributions from 22 to 18

Source: FSB workplace pensions survey 2024

Raise prices

Take lower profits/limit my own compensation

Recruit fewer workers

Cancel/scale down plans for investing in the business

Reduce the amount of overtime/bonuses

Reduce hours worked by staff

Reduce pension contributions to a minimum of 3%

Reduce other aspects of the reward package

Cut back on training expenditure

Improve efficiency/raise productivity

Reduce number of employees through redundancies

Invest in machinery/automate certain processes

None of the above Other

“I’ve

always assumed it [employer pension contributions] would gradually go up, but as to the other points of bringing it down for younger people. I don’t have too much of an issue with that although, as I’m sure we all know, younger people tend to start early, don’t stay for long, they might move on and it’s there for a year and then gone. So there is a bit of hassle, but it’s not too much of a problem.”

FSB member, Laundry and dry cleaning/hospitality, South East England

For the proposal for pension contributions to apply from the first £1 of earnings, more than four-fifths (82%) of small employers say that this will cause them to take at least one action in response to this change, while 18 per cent say that this will not have any impact on their business. The larger proportion of those citing an impact in comparison to the proposal on lowering the age for pension contributions could be because of the likelihood of a larger impact on all employers in terms of contribution and administration costs. However, our research also shows that businesses with 10 employees or more are slightly more likely to report an impact (88%) than those with one to nine employees (82%).

Out of those small employers that say that the proposal to change pension contributions to apply from the first £1 of earnings will cause them to take action, the most common actions reported are to raise prices (36%), recruit fewer workers (28%), and take lower profits/absorb costs (32%), while a fifth (19%) say that it will cause them to reduce their employer contributions to the three per cent minimum. Nine per cent of small employers say that it will cause them to improve efficiency and 3 per cent say that it will cause them to invest in machinery or automate certain processes. Small employers that cited other impacts also mentioned those with lower earnings being at a greater disadvantage with these reforms, given that they are more likely to face financial strain; for others their concerns were around being able to take on the additional cost as a business, and how an increase in cost could contribute to the decision for them to close down.

Figure 17: Actions that small employers would take in response to the proposal for pension contributions to apply from the first £1 of earnings

Source: FSB workplace pensions survey 2024

Recruit fewer workers

Reduce pension contributions to a minimum of 3%

Cancel/scale down plans for investing in the business

Reduce the amount of overtime/bonuses

Reduce other aspects of the reward package

Reduce hours worked by staff

Cut back on training expenditure

Improve efficiency/raise productivity

Reduce number of employees through redundancies

Invest in machinery/automate certain processes

Other

None of the above

However, some small employers were also optimistic about the changes and said that they would strive to accept higher business costs, as well as aiming to diversify and increase sales to help cover the additional costs that these reforms may bring, as workers need better pension provision. Others have cited no impact due to already offering workplace pensions that are calculated from the first £1 of earnings.

The timings for these proposals are still unclear; however, at the time of the 2017 Pensions Review it was suggested by the previous Government that this could be around the mid-2020s. In October 2023 when the previous Secretary of State for Work and

Pensions, Laura Trott, was asked about the planned timetable for implementing the Pensions (Extension of Automatic Enrolment) Act 202323 which includes measures to give the Secretary of State the power to lower the age and earnings eligibility thresholds, she confirmed the Government’s commitment to consult in due course on detailed implementation.24 The new Labour Government has also since been asked about assessing the potential merits of bringing forward the legislative proposals, and the Minister for Pensions at the time, Emma Reynolds, said that the Government would consider if and when to make changes to automatic enrolment balancing the need for pension outcomes, and the effect on businesses.25

Contribution levels

Following the success of auto-enrolment in encouraging individuals to save for retirement, much of the focus of discussion has now shifted to ensuring that contributions are in line with an adequate standard of living and are able to support individuals to the living standard that they aspire to. Since auto-enrolment was introduced in 2012, the minimum amount of contributions that employees and employers need to make has also increased, reaching 8 per cent of earnings in 2019. This was made up of a minimum of 3 per cent for employers and 5 per cent for employees.26 However, increasingly the dialogue has shifted to bring attention to the adequacy of pensions in retirement. The Pensions and Lifetime Savings Association (PLSA) has called for rebalancing automatic enrolment contributions for both employers and employees to 5 per cent each by 2030 and 6 per cent each by the early 2030s, reaching an overall 12 per cent contribution rate.27 This would mean an increase of an additional 3 percentage points from the current 3 per cent mandatory minimum employer contribution rate, and an increase of 1 percentage point for employees from the current minimum mandatory rate of 5 per cent. Both the Investing and Saving Alliance (TISA) and the Association of British Insurers (ABI) suggested similar proposals.28 29

Our research shows that many small employers are aware that workplace pensions contributions are likely to increase in the future; however, many still have concerns about their ability to absorb the increasing costs, particularly in light of regular wage increases and other employment costs rising, including employer National Insurance Contributions (NICs) which increased from 13.8% to 15% in April 2025.30

In the first quarter of 2025, FSB’s Small Business Index research showed that 21 per cent of small businesses reduced their number of employees, compared to only 8 per cent grew their employee numbers. Taken together with the proposals in the upcoming Employment Rights Bill, where according to FSB research 67 per cent of small employers say

that the bill would make them curb hiring, it is not surprising that few small employers would welcome further increases to minimum pension contributions.

Only 8 per cent of small employers say that increasing employer contributions from 3% to 6% will not have any impact on their businesses. Out of small employers that do expect an impact, the most common actions that small employers would take in response are to raise prices (52%), recruit fewer workers (38%), and take lower profits and absorb costs (34%). Worryingly, one in seven (14%) small employers say that it will lead them to reduce their number of employees.

Small employers in our research with 10 or more employees were more likely to say that they would reduce overtime or bonuses, or reduce other aspects of reward packages (both 36%) than those with one to nine employees (27% and 25% respectively). Similar trends are also observed for raising prices (56%) and recruiting fewer workers (41%) for businesses with 10 or more employees, compared to those with one to nine employees (51% and 37% respectively).

For those that cited other impacts, some suggested closing their business, particularly given the high staff costs, and others say that it would impact their ability to continue to employ staff, as well as their future recruitment opportunities, including mitigating this by increasing the use of sub-contractors due to limited liability in terms of the business’s responsibilities around pensions.

In 2018, when the last increase in mandatory minimum pension contributions was implemented, the then-Chancellor took the decision for the increase to take place in April rather than October to align with the tax year, which helped to simplify administration for employers. FSB supported this approach, and would like to see this implemented if any future increases to employer contributions are to take place.31

Figure 18: Actions small employers would take in response to minimum employer contributions being increased from 3% to 6%

Source: FSB workplace pensions survey 2024

Raise prices

Recruit fewer workers

Take lower profits/limit my own compensation

Cancel/scale down plans for investing in the business

Reduce the amount of overtime/bonuses

Reduce other aspects of the reward package

Reduce hours worked by staff

Cut back on training expenditure

Improve efficiency/raise productivity

Reduce number of employees through redundancies

Invest in machinery/automate certain processes

None of the above Other

“I must say that my heart sinks every time it’s come up in the news that employers’ contributions are going to be increased because as a business we cannot put up our prices every time our costs of having employees goes up, and to us 1 or 2% rise on the pension contributions is actually a very, very big deal, whereas it might not be perhaps to a much larger company.”

FSB member, Product design, South West England

There is not only a risk that an increase in minimum contributions for employers could potentially discourage employment opportunities, but the increase in minimum contributions could also have a counterproductive effect on achieving greater retirement savings, if it drives employees to opt out. Our research shows that around a third (34%) of small employers say that some of their employees are likely to opt out if the minimum contribution for employees were to increase from 5 per cent to 6 per cent. In particular, small employers cite concerns around the current cost of living in this regard and the subsequent financial strain on employees, particularly for those in lower-paid or unstable employment.

Figure 19: Small business views on the likelihood of some employees opting out of workplace pensions if minimum employee contributions were increased from 5% to 6%

Source: FSB workplace pensions survey 2024

Adequacy of pension savings is critical for ensuring adequate income in retirement. However, adequacy in retirement will also significantly vary depending on personal circumstances, which also means that a one-size-fits-all approach will not be suitable for all types of savers. Both DWP and Institute for Fiscal Studies research shows that higher earners are more likely to be under-saving than lower earners when looking at the percentage of pre-retirement earnings an individual would need to replace.32 33

Many small employers are likely to have a significant proportion of lower earners in their workforce. FSB research from May 2024 on the National Living Wage (NLW) assessed the impact of the previous NLW increase from £10.42 per hour and found that

77 per cent of small employers would be affected by the increase in NLW, and 16 per cent of small employers were paying all of their staff less than £11.44 prior to the increase in the NLW in April 2024 to this level. Similarly, 38 per cent of small employers report that the increase in the NLW in April 2024 has increased their wage bill “by a large extent”. These figures are likely to be more stark given the increase of the NLW in April 2025 to £12.21 an hour for those aged 21 and over, further stretching smaller employers. This illustrates the need to ensure that adequacy is not a one-sizefits-all approach, without placing undue burdens on employees or employers.

It is critical to carefully consider all options, including improving pension scheme performance, implementing the solution for deferred small pots, and reviewing whether increasing pension contributions across the board and to the same level will be of optimum benefit for employers and employees. The role of pension scheme investment performance also needs to be assessed as part of this.

In 2024, Chancellor Rachel Reeves announced a two-phase Pensions Review, in a mission to boost UK investment and savings.34 The Terms of Reference for the first phase focuses on the pensions landscape, including driving scale and consolidation among defined contribution workplace schemes, while the second phase focuses on improving pension outcomes, and increasing investment outcomes including pension adequacy.35,36 FSB would like to see the second phase of the review extended to looking at the impact of workplace pension provision on small employers and factoring in the impact of any future proposals on them, including the impact and timing of reforms to lower the eligibility criteria for auto-enrolment and assessments in adequacy of pension provision with consideration of the impact on small employers. As part of the final report of phase one of the Pensions Investment Review, it was announced in May 2025 that phase two would be launched in the coming months.37

“One thing that really strikes me and that strikes me with virtually everything the Government brings in is they never seem to consider the impact on a micro company or a small business, and it’s vast compared to bigger businesses that have HR departments, teams of lawyers, and everything else on board. It may not seem like it’s much of an ask, putting it [pension contributions] up from, say, 3% to 6%, but actually that can be huge to a micro business having to set up new schemes for savings or go over all of the work again to pick up your younger people or your lower-paid people or whatever it might be. That’s a massive, massive impact on a small business that might not be much of an impact at all on a big business, and whilst they’re all good things for employees, and anything that employees can do to help themselves in the future is a good thing, it does actually take away from employers and from employers wanting to employ people.”

FSB member, Professional services, South West England

Consolidation of small pots

One of the key challenges that has emerged following the introduction of auto-enrolment pensions is the increasing number of small pots. Small pots are low-value pots that individuals acquire due to moving employment often, as it is employers that choose their workplace pension scheme providers. Many employees are not aware that they have them and those that are aware often tend to lose track of them. It is also likely that the proposals which will allow for calculations to be made from the first £1 of earnings and to lower the age of eligibility for individuals to 18 years of age will lead to a further increase in small pots, given that these proposals will push many seasonal workers into making contributions, as well as many others in ad hoc roles.

One of the possible solutions to identifying and keeping track of small pots has been the work on the pensions dashboards programme. However, its focus has been more on the employee side. The Pensions Dashboards Regulations 2022 introduced the requirements for workplace pension schemes to connect to the pensions dashboard and to effectively provide and respond to requests for information. Following this, The Pensions Dashboards (Amendment) Regulations 2023 introduced a deadline by which pension scheme providers will be required to connect to the dashboards system of 31 October 2026.38 The pensions dashboard will allow individuals to see all of their pension information together in one place and will help to re-unite individuals with their lost pension pots, in turn helping to support them with planning for their retirement.

The smallest businesses are often time- and resource-poor, and understanding pensions law can be particularly challenging for small employers who do not have an HR or legal department. Furthermore, small business owners’ understanding and experiences of pensions tends to be limited, as our research shows, thus as the numbers of individuals being automatically enrolled continue to grow, and on average an individual might work for

11 employers during their working life, the likelihood of small business employers being presented with questions from their staff increases. This is why FSB is supportive of pension dashboards and believes that they will support small business employers in helping their staff to understand information surrounding their pension pots.

There have been a number of discussions on how to tackle the small pots issue. One has been considering ‘pot follows member’ solutions and another the ‘lifetime provider’ model – both of which could potentially be suitable solutions, though with different implications for those who bear the responsibility for their administration. The ‘lifetime provider’ model means that an employee will select a provider and continue with it throughout their working life. However, the ‘lifetime provider model’ is less suitable where the role of employer is more established in collecting contributions from employees and then distributing them to the pension schemes, as it would mean that they would need to contribute to several providers at once rather than one.39 In countries like New Zealand a lifetime provider model was successful as its system has got a central clearing facility, the Inland Revenue Department, which collects contributions and then distributes them appropriately, so there is a limited role for the employer.

Another possible solution is ‘pot follows member’ which means that where employees move to a new employer, their former employer’s pot would automatically move with them to the new employer scheme, provided that certain criteria, including size of the pot, are met. This was also the preferred option for the Small Pots Cross Industry CoOrdination Group.40 However, this was ruled out previously by a Conservative government.

“I think the ‘one pot for life’ sounds great, but in terms of the amount of effort it would take for us to administer it, I think it could be an absolute nightmare and also there’s the associated costs. In terms of the [additional sidecar] savings plan, isn’t it treating people like children, you know, if you get paid, don’t you have your own savings somewhere? I think we don’t have to do everything for everybody, I don’t think.”

FSB member, Education and training, Wales In June 2025, the Government introduced the Pension Schemes Bill, which put forward measures to prevent people from losing track of their pensions through consolidation of deferred small pots through the Multiple Default Consolidator Model.41 The provisions will allow for automatic consolidation of millions of deferred small pots into a small number of high-quality arrangements, mitigating some of the risks that multiple deferred pots present, such as being lost or losing value. The consolidation will initially focus on pots with a value of £1,000 or less, and will be supported by the Small Pots Data Platform for data matching and identity verification on behalf of pension schemes.42 43 The Government’s response within the Small Pots Delivery Group report, published in April 2025, also set out the intention to explore the introduction of greater duties on employers, as part of the Pension Schemes Bill, to ensure that employers provide updated member information to the pension provider when it is available.44

While the Bill does include provisions for any relevant persons to provide prescribed information in relation to purpose of small pots regulations, it is still unclear what that would look like. FSB recognises that this would help to address the stock of pots and reunite savers with lost pensions; however, it is critical that this is implemented without any additional and unnecessary obligations for employers. The report also noted that it is likely that the duties on pension schemes to transfer and consolidate eligible small pots are likely to come into force from 2030. We would urge that this is implemented without delay and consideration is given to any policy which may significantly increase the number of small pots and, therefore, create more difficulty in implementing a small pots solution which is long overdue.

Delivering value for pensions

One of the big topics of debate recently has been around delivering value for workplace pensions. The Pension Schemes Bill introduced powers for delivering value through the Value for Money framework for pension schemes, which will also help with consolidation of the schemes by leaving smaller and lower performing ones. The Value for Money framework will look to deliver the best possible value and aims to shift the focus from cost towards better long-term outcomes for pension savers. The framework was also designed to support and accelerate the consolidation of underperforming and poorly-run schemes in the pensions sector. Given the difficulties that small employers face not only in terms of resources but also in navigating the complexities of the pension system without dedicated HR or pension teams, it is important that the system delivers value for money for small employers and their staff without relying on significant engagement from the businesses themselves, or requiring those businesses to obtain expensive advice. With that said, we are supportive of the aims of the Value for Money framework and as part of that, we support highlighting and removing pension providers from the market when they are not delivering value for savers. This will also enable small employers to make better choices for their employees when choosing an appropriate pension provider.

Another part of the debate on increasing value has been on Collective Defined Contribution (CDC) pension schemes which were introduced by the Pension Schemes Act 2021. CDC schemes are a new type of pension scheme in the UK, which combines features from both Defined Benefit (DB) and Defined Contribution (DC) schemes, and which seek to deliver better outcomes for savers without necessarily incurring a longer-term liability risk for employers. In a CDC scheme both employer and employee contribute to a collective fund which then pays members an income in retirement. However, unlike in a DC scheme, the CDC scheme is managed

collectively, which means the value can go up or down depending on the overall member funding, and unlike in a DB scheme, the employer does not guarantee pensions paid by the scheme.45 Another area of concern around CDCs is that, given the complexity of pensions already, CDC schemes are more complex to understand and explain which may impact employer and employee buy-in. This is why it would need to be supported by appropriate communications campaigns, and guidance for both employers and their employees, including illustrations of potential cost reductions, as well as ensuring that at least some CDC schemes would be open to smaller employers, should they wish to join.

The Government consulted on the draft regulations on unconnected multi-employer schemes in 2024, and plans to lay this legislation before Parliament in 2025.46 FSB believes that in light of the focus on delivering better outcomes for savers, CDC schemes could be beneficial to both employers and their employees. CDC schemes should be taken forward and explored as a viable option for employers and employees to increase the value of their pensions before any proposals for increasing contributions are considered.

Recommendations

• The Government should publish an economic assessment of the impact on the labour market of recent and proposed changes to Government policy on employment. This economic assessment should include the impact of increases to the National Living Wage, and increases to the level of Employer National Insurance contributions, and should also assess the prospective impacts of changes to the autoenrolment age limits and lower earnings limits. The cumulative impact of Government policies on small employers and on labour market participation must be assessed before any further changes are implemented. The Northern Ireland Executive should carry out a similar assessment in respect of its own rules.

• The Government should convene regulators, including The Pensions Regulator and the Financial Conduct Authority, and industry stakeholders, to simplify pension rules and provide clearer guidance for small employers, reducing complexity and unnecessary admin. This would be a pro-growth, pro-employment move.

• The Department for Work and Pensions (DWP) should include a review of the impact of provision of workplace pensions on small employers in Phase Two of the Pensions Review, and look to learn lessons from the previous staging of auto-enrolment duties, for improvement in any future expansion. In particular, DWP should consider the burden on small employers before any future proposals are implemented, including looking at financial costs of ongoing administration and advice, as well as payroll software integration and small business understanding of how to comply, as these are the key factors to securing business buy-in for any future policy.

• DWP should not consider implementing any increase in minimum workplace contributions for employers until the Pensions Review has taken place. The Pensions Review should include an assessment of the impact of workplace pensions on small employers and any impacts on participation in the labour market.

• DWP and HM Treasury (HMT), together with industry, should consider not just the level of contributions when assessing pensions adequacy, but also other factors which impact outcomes for savers. For example, looking at increasing the level of pension contributions by savers and employers should not be looked at in isolation, but instead should be assessed together with other factors such as the overall performance of pension schemes and investment returns, the retirement age and the starting age for contributions, and the final retirement income needed, amongst any other factors that can influence outcomes for savers. Simply looking at increasing contributions could place burdens on small employers and their employees, particularly those on lower income, meaning that a one-size-fits-all approach is unlikely to be suitable.

• DWP and HMT should review how pension scheme investment in the economy can increase investment in small businesses, either through direct investment, or indirectly through wider support measures. This should include measures to make the UK domestic market more attractive for investment but also to encourage investment in unlisted assets where risk-sharing allows. In addition, learning from other nations and exploring the possibility of other models such as Collective Defined Contribution schemes in increasing investment returns and risk pooling would be beneficial.

Methodology

The research that this report is based on was twofold. It consisted of a survey of small businesses, along with focus groups and one-to-one interviews to better understand the experiences of FSB members in relation to workplace pensions. Members were asked to participate in the research through email invitations. The focus group took place via Zoom, and the participants were sourced through recontact data from the survey.

The survey was administered by the research agency Verve and was in the field from 12th February – 28th February 2024. The survey received 928 responses and the findings were weighted to make them representative for FSB membership. All percentages have been rounded up to the nearest percentage point, which is why some of them may not add up to 100 per cent.

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Endnotes

1 Department for Work and Pensions, New timetable clarified automatic enrolment starting dates, 2012 https://www.gov.uk/government/news/new-timetableclarifies-automatic-enrolment-starting-dates

2 House of Commons Work and Pensions Committee, Pensions automatic enrolment inquiry, 2016 https:// committees.parliament.uk/work/5451/pensionsautomatic-enrolment-inquiry/

3 House of Commons Library, Pensions: Automatic enrolment – current issues, 6 December 2023 https:// commonslibrary.parliament.uk/research-briefings/ sn06417/

4 DWP, Workplace pension participation and savings trends of eligible employees; 2009 to 2023, 2024 https://www.gov.uk/government/statistics/workplacepension-participation-and-savings-trends-2009to-2023/workplace-pension-participation-andsavings-trends-of-eligible-employees-2009-to-2023

5 Ibid.

6 DWP, Workplace Pensions and Automatic Enrolment: employers’ perspectives 2022 https://www.gov.uk/ government/publications/workplace-pensions-andautomatic-enrolment-employers-perspectives-2022/ workplace-pensions-and-automatic-enrolmentemployers-perspectives-2022

7 Review of the Automatic Enrolment Earnings Trigger and Qualifying Earnings Band for 2025/26: Supporting Analysis, 2025 https://www.gov.uk/ government/publications/review-of-the-automaticenrolment-earnings-trigger-and-qualifying-earningsband-for-202526-supporting-analysis

8 Low Pay Commission, National Living Wage to increase to £12.21 in April 2025, 2024 https://www. gov.uk/government/news/national-living-wage-toincrease-to-1221-in-april-2025

9 DWP, An independent review of the National Employment Savings Trust (Nest), 2022 https://www. gov.uk/government/publications/independent-reviewof-the-national-employment-savings-trust-nest/ an-independent-review-of-the-national-employmentsavings-trust-nest#has-nest-achieved-and-is-itdelivering-on-its-original-objectives

10 House of Commons Work and Pensions Committee, Pensions automatic enrolment inquiry, 2016 https:// committees.parliament.uk/work/5451/pensionsautomatic-enrolment-inquiry/

11 House of Commons Work and Pensions Committee, Automatic enrolment: Government Response to the Committee’s Eleventh Report of the Session 2015-16, 2016 https://publications.parliament.uk/pa/cm201617/ cmselect/cmworpen/610/610.pdf

12 Ibid.

13 DWP and HMT, Pensions Investment Review: Unlocking the UK pensions market for growth https:// www.gov.uk/government/consultations/pensionsinvestment-review-unlocking-the-uk-pensionsmarket-for-growth

14 HMT, DWP and MHCLG, Pensions Investment Review: Final Report https://www.gov.uk/government/ publications/pensions-investment-review-final-report

15 House of Commons Work and Pensions Committee, Pensions automatic enrolment inquiry, 2016 https:// committees.parliament.uk/work/5451/pensionsautomatic-enrolment-inquiry/

16 DWP, Workplace pensions and automatic enrolment: employers’ perspectives, 2022 https://www.gov.uk/ government/publications/workplace-pensions-andautomatic-enrolment-employers-perspectives-2022/ summary-workplace-pensions-and-automaticenrolment-employers-perspectives-2022

17 Department for Work and Pensions and Government Social Research Profession, Lessons on Pensions Engagement, 2024 https://www.gov.uk/government/ publications/lessons-on-pensions-engagement

18 Gov.uk, Workplace pensions - what your employer can and cannot do [accessed August 2024] https://www. gov.uk/employers-workplace-pensions-rules

19 Small Business Index is a quarterly survey and an average was calculated

20 The Pensions Regulator, Work out your client’s costs [accessed August 2024] https://www. thepensionsregulator.gov.uk/en/business-advisers/ automatic-enrolment-guide-for-business-advisers/ work-out-your-clients-costs

21 Department for Work and Pensions, Automatic enrolment review 2017: Maintaining the momentum, 18 December 2017 https://www.gov.uk/government/ publications/automatic-enrolment-review-2017maintaining-the-momentum

22 Office for National Statistics, The occupations most dependent on older and younger workers, May 2023 https://www.ons.gov.uk/employmentandlabourmarket/ peopleinwork/employmentandemployeetypes/articles/ theoccupationsmostdependentonolderandyoungerworkers/2023-05-31

23 Legislation.gov.uk, Pensions (Extension of Automatic Enrolment) Act 2023 https://www.legislation.gov.uk/ ukpga/2023/44

24 UK Parliament, Pensions (Extension of Automatic Enrolment) Act 2023, Question for Department for Work and Pensions, September 2023 https:// questions-statements.parliament.uk/writtenquestions/detail/2023-09-19/200385

25 Workplace Pensions, Question for Department for Work and Pensionshttps://questionsstatements.parliament.uk/written-questions/ detail/2024-11-12/13981

26 House of Commons Library, Pensions: Automatic enrolment – current issues, 2023 https:// commonslibrary.parliament.uk/research-briefings/ sn06417/

27 Pensions and Lifetime Savings Association, PLSA calls for levelling up of workplace pensions, 2022 https:// www.plsa.co.uk/Press-Centre/Press-Releases/Article/ PLSA-calls-for-levelling-up-of-workplace-pensions

28 Association of British Insurers, Automatic Enrolment: What will the next decade bring?, 2022 https:// www.abi.org.uk/globalassets/files/publications/public/ lts/2022/automatic-enrolment-what-will-the-nextdecade-bring/

29 The Investing and Saving Alliance (TISA), TISA leads industry group on biggest overhaul to AutoEnrolment, including a personal contribution ‘opt out’ for the financially insecure 2020, https://www.tisa. uk.com/wp-content/uploads/2020/09/FINAL-GettingRetirement-Right-proposals-September-2020_-002. pdf

30 HM Revenue & Customs, Changes to the Class 1 National Insurance Contributions Secondary Threshold, the Secondary Class 1 National Insurance contributions rate, and the Employment Allowance from 6 April 2025, 2024 https://www.gov.uk/ government/publications/changes-to-the-class1-national-insurance-contributions-secondarythreshold-the-secondary-class-1-nationalinsurance-contributions-rate-and-the-empl/ changes-to-the-class-1-national-insurance-contributionssecondary-threshold-the-secondary-class-1-nationalinsurance-contributions-rate-and-the-empl

31 House of Commons Library, Pensions: Automatic enrolment – current issues, 2025 https:// commonslibrary.parliament.uk/research-briefings/ sn06417/

32 DWP, Analysis of future pension incomes, 2023 https://www.gov.uk/government/statistics/analysis-offuture-pension-incomes/analysis-of-future-pensionincomes

33 IFS, Adequacy of future retirement incomes: new evidence for private sector employees, 2024 https:// ifs.org.uk/publications/adequacy-future-retirementincomes-new-evidence-private-sector-employees

34 HMT, DWP et al, Chancellor vows ‘big bang on growth’ to boost investment and savings, 2024 https:// www.gov.uk/government/news/chancellor-vows-bigbang-on-growth-to-boost-investment-and-savings

35 HMT, DWP et al. Chancellor vows ‘big bang on growth’ to boost investment and savings, 2024 https:// www.gov.uk/government/news/chancellor-vows-bigbang-on-growth-to-boost-investment-and-savings

36 HMT, DWP et al. Pensions Review – Terms of Reference: Phase One https://www.gov.uk/ government/publications/pensions-review-terms-ofreference-phase-one

37 HMT, DWP and MHCLG, Pensions Investment Review: Final Report https://www.gov.uk/government/ publications/pensions-investment-review-final-report

38 DWP, Pensions dashboards: guidance on connection: the staged timetable, 2024 https://www.gov.uk/ government/publications/pensions-dashboardsguidance-on-connection-the-staged-timetable/ pensions-dashboards-guidance-on-connection-thestaged-timetable

39 Publications Office of the European Union, Best practices and performance of autoenrolment mechanisms for pension savings, 2021 https://op.europa.eu/en/publication-detail/-/ publication/6f40c27b-5193-11ec-91ac01aa75ed71a1/language-en

40 Association of British Insurers, Small Pots CrossIndustry Co-Ordination Group: Spring 2022 Report, 2022 https://www.abi.org.uk/globalassets/files/ publications/public/lts/2022/small-pots-co-ordinationgroup-spring-2022-report.pdf

41 Pension Schemes Bill, 2025 https://bills.parliament.uk/ bills/3982

42 DWP, Small Pots Delivery Group Report, 2025 https:// www.gov.uk/government/publications/small-potsdelivery-group-report

43 Pension Schemes Bill, 2025 https://bills.parliament.uk/ bills/3982

44 Ibid.

45 House of Commons Library, Research BriefingPensions: Collective Defined Contribution (CDC) schemes, 2024 https://commonslibrary.parliament.uk/ research-briefings/cbp-8674/

46 Gov.uk, The Occupational Pension Schemes (Collective Money Purchase Schemes) (Extension to Unconnected Multiple Employer Schemes and Miscellaneous Provisions) Regulations 2025 https://www.gov.uk/ government/consultations/the-occupational-pensionschemes-collective-money-purchase-schemesextension-to-unconnected-multiple-employerschemes-and-miscellaneous-provisions

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