Small family businesses and people with a single employee will need to start paying into a pension for their workers in the next phase of a move to boost retirement savings.

From May 31, 2015, thousands of firms with fewer than 30 employees will start to be phased into the Government’s Automatic Enrolment scheme, which was set up amid fears that people are living for longer but are not saving enough money for their old age.

Around 14,000 small and micro businesses will be reaching their staging dates this month (June), with tens of thousands due to hit their own staging dates over the next two years, according to the Pensions Regulator.

More than five million employees have already been placed into workplace pensions.

Eventually as many as 1.3million employers will have automatically enrolled up to 10 million eligible workers into a workplace pension scheme.

So far, the scheme has been hailed as a success, with around nine in 10 people who have been put into a pension choosing to stay in it. Employees have the right to opt out of the scheme but they must be enrolled into it before they can do so.

By the time they reach their staging date, an employer should have everything in place and be ready to enrol their staff into their automatic enrolment pension scheme.

Employers persistently ignoring their auto-enrolment duties could ultimately face fines.

Research released today by NOW: Pensions revealed that some 27 per cent or 350,000 small businesses are at risk of getting slapped with penalties because they haven’t yet given any thought to finding a pension provider. However, this was an encouraging improvement on the 44 per cent who admitted they were unprepared last year.

The Pensions Regulator said that so far, escalating penalties have only been used on a handful of occasions. It said that it does not want to fine businesses and it wants to work with employers to help them meet their duties.

At present, employers must contribute one per cent of an employee’s qualifying earnings, but from October 2017 this will increase to two per cent and from October 2018 it will increase again, to three per cent.