Two-thirds of small companies do not currently provide a pension scheme for their staff, research indicates.
Around 96 per cent of firms employing 250 or less people that do not have a pension scheme said they were put off offering one because of the costs involved, according to the Association of Consulting Actuaries.
But new regulations mean that between 2014 and 2016, the sector will have to begin automatically enrolling staff into a pension scheme, although individuals will retain the right to opt out.
By October 2017, workers will have to contribute at least four per cent of their pay to a scheme, with companies paying in three per cent and the Government topping this up with one per cent.
However, 35 per cent of smaller firms said they expected their employees to opt out of pension provision, with 84 per cent saying the cost would put them off, while two-thirds thought their staff were disillusioned with pensions.
Yesterday's research found that among companies that currently offer a pension scheme, nine out of 10 had closed their defined benefit scheme to new members, while 41 per cent had closed it to existing ones too.
The majority of firms that offered a defined contribution scheme also had combined employer and employee contribution levels that were below eight per cent.
ACA questioned 404 firms employing 250 or fewer people.