Duncan Cheatle, complained of the administrative burden of the auto-enrolment scheme, which has dozens of ‘staging dates’ by which firms must comply.
‘We should be helping firms increase their workforce, not introducing structures that might prevent them from doing so,’ he said.
‘The fact that employees can opt out a month after joining highlights the potential waste of time and money this scheme could represent. The smallest firms, which do not have the administrative structures to deal with this burden, will be hardest hit.’
Firms face fines for failing to comply. So far the Pensions Regulator has handed out 169 fixed penalty notices.
Some 50,000 smaller firms are due to auto-enrol staff in a pension this year and a further 500,000 in 2016.
All firms set up before April 2012 were set a deadline between October 1, 2012 and April 1, 2017, according to their size, though firms set up after April 2012 can delay their staging date. The deadlines for larger firms have passed, while the date for those with 54 to 57 staff is coming up at the end of this week.
Manufacturers are now shouldering the biggest burden, with 6,000 obliged to implement the rules in this tax year, the most in any sector, said Alex Ambler of business consultancy Rousseau Associates.
He added: ‘Those that haven’t been factoring this into their budget several years in advance may now be struggling to find the necessary cost savings without affecting their growth plans.’