Thousands of small businesses are about to be hit by new pension auto-enrolment rules, yet many remain unprepared, according to law firm Irwin Mitchell.

Auto-enrolment will mean that all UK employers must automatically place certain members of their workforce into a qualifying pension arrangement.

The rules are being introduced in stages, with the largest firms already bound by the rules and smaller business gradually being introduced up to 2018.

Around 6,000 SMEs employing between 160 and 249 people will come under the rules in April. It is anticipated that 30,000 companies will implement changes over a four-month period in mid-2014.

All employers must contribute to a pension arrangement and must monitor and keep records of their workforce's membership of the scheme.

Recent research by the National Employment Savings Trust revealed that 55 per cent of businesses swapping to auto-enrolment had trouble understanding the rules, while a fifth said it took them at least 16 months to transfer.

Nigel Bolton at Irwin Mitchell said: “Many small and medium-sized businesses are ready, however we think that there are still many that do not fully appreciate what is involved and therefore will not be ready in time.”