UK businesses are facing £15.4bn in set-up costs if they're to meet the requirements of new pensions auto enrolment legislation, according to a report from the Centre for Economic Business Research (CEBR), commissioned by Creative Auto Enrolment.

The 'Finding your way out of the auto enrolment maze' research found that small businesses face a setup fee of £8,900 to comply with the legislation. This rises to £12,600 for small-medium businesses of 100 employees and £15,600 for companies employing 250 people, Large companies with up to 500 staff are facing an average bill of £22,300 for the one-off costs of implementing auto enrolment. Regional labour costs across the country could see these costs pushed even higher, with the predicted bill for the largest firms in London hitting £28,300.

The research also found that businesses are faced with completing a total of 33 different administrative tasks ahead of the compliance date, while simply getting ready for auto enrolment could take each business up to 103 man days, with the recurring administration burden taking over three days each month for some firms.

Jonathan Russell, partner, UK200Group member firm ReesRussell: 'To all intents auto enrolment is just another tax where the employer is being placed in as collector and contributor with no allowance given to the costs of administering such a scheme.

'Small businesses will as ever just have to bite the bullet and pay up in all respects but it is time for government to understand that small businesses do not necessarily have the skills to deal with these sort of administrative burdens.'

Even businesses that choose to use the Government's National Employment Savings Trust (NEST) will be subject to the costs and administrative challenge as they first need to complete all the preparatory work, while the legislation will effectively see small and medium sized business owners, who may have little to no experience in the field of pensions, having to tackle the huge responsibility of choosing an appropriate pension scheme for their staff.

David White, managing director of Creative Auto Enrolment, which helps businesses meet their auto enrolment responsibilities, said: 'Businesses must start thinking about what they need to do as soon as possible, as they can't escape auto enrolment. The staging dates for each business are coming, and each and every company, regardless of size, will need to prepare. Our report highlights that the work involved is potentially huge, is specialist and is complex.

'There's no benefit to businesses delaying getting their auto enrolment strategy in place, but hefty fines will penalise those who don't meet their responsibilities in time. With the clock ticking, businesses need to start thinking now about what their duties are under the new legislation and who within or outside their business can help them achieve this.'