News has surfaced that most small businesses in the country do not offer pension schemes for their employees.  The information was published in a survey taken by the Association of Consulting Actuaries and shows that a staggering 80 per cent of small businesses in Britain failed to provide any sort of pension scheme to their employees.

The chairman of the ACA, Keith Barton, put the high results down to the high cost of living that Britain is now facing as well as many other factors that affect small businesses.  Barton said, “[The results] can be no surprise, given the significant increases in the cost of running these schemes such as lower investment returns, increasing life-spans and extra regulatory requirements.”

The survey also showed how 91 per cent of SMEs had halted salary-related contributions to employees.  These figures are shocking not only on their own, but especially when compared with results from only 17 years ago where only 18 per cent of SMEs were taking a similar stance.

The ACA has claimed that the level of contributions for pensions needed to be doubled in order to give a secure and comfortable retirement and for this to happen the ACA have called for the introduction of incentives to be put in place in an attempt to get the public to start thinking more about their winter years.

Barton went on to say, “We need some serious new incentives to encourage higher levels of corporate and employee pension saving to levels well above 8% of earnings - realistically a figure of at least double that is needed to provide anything like a comfortable retirement.  This is going to be a real challenge given the fiscal tightening likely in the period ahead, but it has to be addressed.”

The survey went on to show that 40 per cent of small businesses that employ 4 people or less again offered no pension scheme at all, putting their employees in a very difficult position in the future.

The results show that small businesses will be the sector hit hardest when the Government’s pension reforms come into effect in 2012.  The Government’s plan is to have every employee in the country be enrolled onto a pension scheme.

Secretariat at the ACA, David Robertson, claims that the Government’s plans are a great step forward, saying, “Although the government legislation is timely as a lot of people don’t have pension schemes, it sets the benchmark high when SMEs will be finding it difficult to balance their finances.”

Barton went on to say, “Much confidence has been lost in savings vehicles over the last few months and years and the expected higher taxes at the end of this recession, bodes ill for employers and employees finding more financial room to make higher pension contributions.”

The ACA have claimed that they do not fully back the Government’s plans for a pension reform, claiming that they do not do enough for the pension crisis that the country is currently facing.

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