27 October 2010 Last updated at 06:33 ET

All firms must offer pensions, government agrees

No business will be too small to offer a pension to its workers The government has agreed that all UK businesses, regardless of size, should offer a company pension scheme or enrol their staff into the new National Employment Savings Trust (Nest).

Nest is due to start next year, with all firms joining by September 2016.

The government says it will mean that between four million and eight million workers will start to save in a pension scheme for the first time.

To be eligible for automatic enrolment, staff will have to earn at least £7,475 a year.

However their contributions will be based on their income above the national insurance earnings threshold - currently £5,715.

Workers whose earnings lie between those two levels should be able to opt into Nest and receive employer contributions as well.

Welcome

The revised rules on Nest come in the recommendations of an independent review into the way workers should be automatically enrolled into the scheme.

The findings of the review were welcomed by Pensions Minister Steve Webb.

"The National Employment Savings Trust (Nest) will be the new low-cost pension scheme that will be the vehicle for saving for millions," he said.

"For the first time, employers will have to make pension contributions for eligible workers from 2012, ending decades of decline of membership in workplace pension schemes," he added.

Pensions for all?

The principle of automatic enrolment of employees into pension schemes was established in the Pensions Act (2008), which set out reforms designed to make saving for retirement the norm among employees.


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The proposed changes are still complicated for micro businesses to put in placeâ€