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02 Jan 2013

Some 75% Of Small Businesses Without Pension Scheme

Some 75% of small firms in the UK do not run a pension scheme, a survey by the Association of Consulting Actuaries (ACA) showed yesterday.

Only 25% of small businesses provide a pension provision, compared with one third two years earlier. In addition, combined employer and employee pension contributions at firms that still have pension schemes are below 9% of salary on average, which is a third of the level in some pension schemes in public sector companies.

According to the ACA, employers´ National Insurance contributions should be reduced so that businesses have more scope to increase the pension pots of their employees. While all firms will be required to auto-enroll their workers into a workplace pension scheme by 2018 under the government´s plan, this would prove insufficient to make employers offer adequate pension provision if the government did not offer financial incentives to raise contributions to at least 12% of salary, the ACA said.

The survey showed that 98% of employers would be able to boost contributions to pension schemes if employers´ national Insurance payments were reduced. Over 80% said that less red tape related to pensions would make it easier, while nearly two thirds said that a cut in corporate tax would help them contribute more.

Most of the firms still running a pension scheme offer a defined contribution scheme, while most of the few businesses that offer final salary schemes said that filling the funding gap would take at least 10 years, possibly up to 20.

The survey covered 344 firms with up to 250 employees.

Copyright © M2 Bespoke 2013

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