New pension rules will cost the UK's smallest firms at least an extra £2,550 a year, a business group has warned.

The Federation of Small Businesses (FSB) said a typical firm employing just four people on average salaries of £25,000 would have to find an extra £2,550 a year as a result of Government plans for workers to be automatically enrolled into pension schemes.

To put the figure into context around half of members of the FSB had a turnover of between £25,001 and £200,000 last year, while one in 10 had a turnover of less than £25,000.

The new rules, which will be phased in from 2012, state that all workers earning more than £7,475 who have been with a company for more than three months will be automatically enrolled into a workplace pension, although they will retain the right to opt out.

Individuals will pay in 4% of their pay, with employers contributing 3% and the Government topping this up with 1%.

The FSB had been calling on the Government to make micro firms exempt from the new rules, and it said it was "extremely disappointed" that the Government had ignored its calls.

It added that the Government's estimate that the new rules, which will be fully in force by 2017, would cost firms with up to four employees £46 per worker in administration was a "gross underestimation". It is urging the Government to carry out an impact assessment on the issue.

The group fears that the true administrative cost to firms could be "extortionate" and is concerned that measures put in place to reduce the administrative burden for small businesses do not go far enough. It is also worried that the Pensions Regulator will apply a heavy hand to small firms and is calling for it to communicate clearly and effectively with small businesses about what is required from them under the new rules.

Mike Cherry, policy chairman of the Federation of Small Businesses, said: "It is vital that everyone is able to save for their future but the automatic enrolment scheme is going to cost the smallest businesses dear.

"While Government has put measures in place to make the enrolment process easier for micro firms, it is going to cost them at least an extra £2,550 a year."