How small businesses can soften the pensions blow

There are ways for small businesses to mitigate the effect of increased costs of higher pension contributions.

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Small businesses face a painful squeeze
(Image credit: (C) Rido ((C) Rido (Photographer) - [None])

On 6 April, the minimum amount that employers must pay into the accounts of staff enrolled in their occupational pension scheme climbs from 2% to 3% of salary. That will increase some companies' costs by 50% overnight. With a 4.9% rise in the minimum wage coming into effect at the same time, many small businesses are facing a painful squeeze.

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David Prosser
Business Columnist

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.