No pension scheme offered by majority of small firms
Two-thirds of small companies across the UK offer no pension
scheme to employees, new research from the Association of
Consulting Actuaries (ACA) has revealed.
Alongside these findings, the research showed that those small
firms which do run defined contribution pension schemes only
attract total contributions - from both employer and employee - of
less than eight per cent of earnings.
This percentage may not allow an employee to build a large
enough pension pot to cover them as they enter old-age.
The vast majority - 96 per cent - of the smaller firms
questioned said that cost was the reason behind the lack of pension
scheme in place.
Stuart Southall, ACA Chairman, said, "Our survey has found
savings by both employers and employees into defined contribution
schemes generally have failed to keep pace with the cost of
building a sufficient pension.
"Pension contributions into most schemes reporting to this
survey need to double on average to at least 15 per cent of
earnings if reasonable retirement incomes are to be achieved," he
said.
The new pension reforms, to be rolled out between 2014 and 2016,
will see all firms being required to auto-enrol staff into a
‘qualifying workplace pension scheme’.
Contributions must comprise eight per cent of employee earnings
– at least three per cent from the employer, four per cent from
staff member and one per cent in tax relief – by October 2017.