Pension reforms risk higher prices, fewer jobs and slower growth, FSB warns

04 Jul 2025

Prospective pension reforms could see small firms raise prices, cut jobs or slash profits, the Federation of Small Businesses (FSB) has warned.

The FSB's research looks at how the current rules relating to auto-enrolment are already adding cost and complexity onto small employers.

It also shows how possible changes expected in the second phase of the government's Pensions Review – due later this year – could put more pressure on small firms already dealing with higher wage bills and mounting National Insurance contributions (NICs).

According to the research, most employers already say that decoding pension rules is a headache and a quarter are paying over £500 a year for advice – even before new changes are introduced.

The FSB says that small employers want to do right by their staff – but 79% are concerned about the rising cost of employment, and reforms must reflect that pressure.

Tina McKenzie, Policy Chair of the Federation of Small Businesses, said: 'Small business owners want to do the right thing. Entrepreneurs have taken on auto-enrolment, absorbed the costs, navigated the jargon, and kept paying into their staff's pensions even when their own margins have fallen. But goodwill has limits.

'The more complex and expensive the system becomes, the more we risk pushing employers from willing participants into reluctant bystanders. If the government wants pensions policy to succeed, it must prioritise clarity over complexity and provide the right support.'