05 September 2008
The first report of a survey on pension trends in companies with
250 or fewer employees conducted by the Association of Consulting
Actuaries (ACA) has confirmed that the Governments proposed
personal accounts and auto-enrolment into pension schemes should
boost pension coverage in the UK smaller companies sector, but the
reforms are also likely to cause widespread reduction of benefits
and closures of existing pension schemes.
55% of the companies responding to the survey said the schemes
they presently run would fall short of the personal accounts
exemption test, with over 60% paying lower contributions than
proposed for personal accounts, particularly amongst the smallest
companies.
The study also found that where a workplace scheme is offered in
companies employing 50 or fewer staff, average combined employer
and employee pension contributions are below 5% of earnings (and
only one in five of these1.2 million companies run such a
scheme).
31% of companies expect to reduce their pension scheme benefits
(to mitigate the cost of higher membership) or to close their
scheme in favour of personal accounts.
