Member Article

Majority of small businesses cannot afford pensions

Three quarters of UK small businesses are unable to afford the costs of a company pension scheme, new research has revealed.

Of the quarter that does have the funds to run such schemes, only half are in a financial position to make regular contributions.

The figures come from research carried out by Clifton Asset Management (CAM), who surveyed more than 1,000 business owner-managers throughout the UK.

“We regularly hear about the ‘pensions timebomb’ because it makes a snappy headline, but these worrying figures show it is fast becoming a reality,” said Neil Greenaway, managing director at CAM.

“Amid all the recent outcry about the banks, credit crunch and recession, talk of pensions has been put on the back burner as small businesses focus on getting through this economic crisis, rather than their long term retirement plans.”

David Wilson at debt advice company NE Money said: “It comes as no surprise to us in the North East financial services industry that the cut backs that both businesses and individuals make is planning for their futures. It’s at times like these when people focus on the immediate financial commitments they have and ‘fire fight’ to ensure their survival.”

Mr Wilson also reminded businesses that they are sometimes legally obliged to provide a pension scheme for their employees.

“It’s important for North East businesses to know their obligations to employees, know what their immediate financial requirements are and then plan for the future of their businesses and employees. In the current climate of redundancies its unrealistic to expect every business to have pension arrangements in place.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .