Small Businesses Face Challenges Amid Pension Contribution Increase
- Small firms and startups will be hit hardest by doubling of auto-enrolment employer pension contributions
- Minimum combined contribution increased to 5% for more than 9 million UK workers
- Contributions set to increase again in April 2019 to a total minimum of 8%
- Small businesses in labour-intensive industries like retail, construction and childcare will be impacted the most
- FSB suggests increasing Employment Allowance to £4,000 and new incentives for self-employed
The Federation of Small Businesses (FSB) claims that small firms and startups will be hit the hardest by the doubling of auto-enrolment employer pension contributions. From April 6, 2018, employers must contribute 2% of qualifying earnings while staff contribute 3%, making a combined total minimum contribution of 5%. This figure is set to rise again on April 6, 2019 to 3% for the employer and 5% for employees, resulting in an 8% minimum contribution. FSB national chairman Mike Cherry states that the smallest firms and start-ups will be affected the most, especially those in labour-intensive sectors like retail, construction, and childcare, which already face high inflation and skills shortages. He suggests increasing the Employment Allowance to £4,000 and implementing new incentives for self-employed individuals who currently miss out on auto-enrolment.
Factuality Level: 8
Factuality Justification: The article provides accurate and relevant information about the increase in employer pension contributions and its impact on small businesses and startups. It cites a source (FSB) and quotes the national chairman of FSB, Mike Cherry, to support its claims. However, it could provide more context or data to back up the statement that these sectors are already facing high inflation and skills shortages.
Noise Level: 3
Noise Justification: The article provides relevant information about the increase in employer pension contributions and its impact on small businesses and startups, but it lacks a comprehensive analysis of long-term trends or possibilities, intellectual honesty, and actionable insights. It also does not explore the consequences for those bearing risks or hold powerful people accountable.
Financial Relevance: Yes
Financial Markets Impacted: Small businesses and startups in labour-intensive industries such as retail, construction, and childcare
Financial Rating Justification: The article discusses the impact of increased employer pension contributions on small firms and startups, which can affect their financial stability and operations. This has implications for various sectors and may lead to potential changes in hiring practices or business decisions.
Presence Of Extreme Event: No
Nature Of Extreme Event: Other
Impact Rating Of The Extreme Event: Minor
Extreme Rating Justification: This article discusses an increase in pension contributions for employers and employees, which may have a financial impact on small businesses and startups, but it does not describe an extreme event.
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