ONE in five small businesses would have to cut jobs or reduce wages if a national savings scheme was introduced, research showed today.

The Pensions Commission has proposed introducing a National Pensions Saving Scheme (NPSS) into which all workers who did not have access to a better occupational pension would be automatically enrolled - although they would be able to opt out.

Individuals would contribute 5% of their pay to the scheme, with companies paying in 3%.

But 20% of small firms said they would have to take action to meet the costs of the new scheme, such as reducing wages or employment levels, according to the Association of Consulting Actuaries (ACA).

At the same time one in four small companies said they would either change their existing pension scheme to mitigate the cost of higher take-up levels, or they would close it altogether.

Half of companies also said the pension scheme they currently offered was not as good as the NPSS.

Despite worries about the cost of the scheme, 56% of small businesses said they supported the idea, compared with 17% who actively opposed it.