MERSEYSIDE’S business leaders were warned last night to prepare for a pensions overhaul that could cost industry £3.2bn.

Pensions minister Steve Webb has said new “auto-enrolment rules” will come into force, meaning bosses will have to ensure new recruits and existing staff are part of a company pension scheme.

The announcement prompted Mace & Jones head of employment Martin Edwards to urge firms – especially small and medium-sized outfits – to start planning for the law change now.

The Government is enacting part of the 2008 Pensions Act, which contained provisions for changes for the UK’s pension system. Because people are living longer, the Government wants as many people as possible to start thinking about their retirement.

Previously, company pension schemes were “opt-in” but between 2012 and 2016 they will become “opt-out”, meaning firms are likely to have to set aside more money to cover the employers’ contributions.

Mr Edwards told LDP Legal: “These are clearly fundamental changes affecting all small businesses.

“We urge businesses to start planning now for these changes. They will carry significant costs and firms will need to factor this cost into financial planning.

“There will also be additional and time-consuming red tape to comply with.