An independent review of pensions is about to be submitted to government ministers, according to the Financial Times, which will add to staff costs faced by smaller companies.

Until now, only medium-sized and large companies have been obliged to offer pension schemes from 2012 onward. But - if the review is accepted by pensions minister Steve Webb - smaller companies will not be excluded.

All employers will have to automatically enrol all staff into pension savings schemes. The review suggests, however, that employers should have the chance to wait 3 months until new employees have passed a probationary period.

Smaller businesses will be able to use the National Earnings Savings Trust (NEST) which aims to offer a low cost pension scheme for employees and employers. The review suggests that all staff should have to contribute as soon as their earnings rise above £7500 per annum

At the beginning, the review recommends, staff and employers should have to each contribute 1% of salary. But within 5 years of intriduction, the employer should have to pay 3% and the employee contibute 5%.