Businesses in the UK are ill-prepared for changes to pensions set to come into force on 1 October 2012, according to an employment law firm.

Bibby Consulting & Support says that with amendments meaning that companies will have to offer auto-enrolment into a pension scheme, many are ‘sleepwalking into chaos’.

Alterations to pension enrollment will mean that businesses will have to automatically enrol all eligible employees (those not already in an employer’s pension scheme or who have been at a company for fewer than 12 weeks) into the employer’s pension scheme or the National Employment Savings Trust.

Michael Slade, managing director of Bibby Consulting & Support, says that he is ‘very concerned’ that businesses are not ready for the changes.

‘We think it’s a good idea to have all employees signed up to a pension, but too many businesses still haven’t managed to get their heads around the obligations that automatic pension enrolment will place on them.

‘Even though the start date has already been delayed once to help businesses, it will still be upon them before they know it.’

After the amendment has come into force, employees will see pension contributions supplemented by employers’ contributions and will also be subject to tax relief.

The changes will be introduced gradually, with large employers the first recipients.

Slade adds, ‘Not surprisingly, employees themselves are very confused about what their options are and they will remain that way until employers can get their heads around the changes.

‘These changes are potentially very confusing and if companies get them wrong they could be facing an unhappy workforce and a barrage of complaints.’