Member Article

Small firms 'may close pensions'

Four out of 10 small firms are considering closing their existing pension scheme when the Government’s new personal accounts are introduced in 2012, research has shown.

Around 41% of companies with less than 250 staff are thinking of replacing their existing scheme with low-cost personal accounts, according to the Association of Consulting Actuaries (ACA).

Around 54% of smaller employers also said they were likely to revise the pension benefits they offered to offset the increased costs if they decided to enrol all workers into their existing scheme.

ACA warned that the changes were likely to have a big impact on the cost of pension provision for companies, as many pension schemes currently have less than a 60% take up rate among staff, while many smaller firms do not currently offer a pension at all.

Keith Barton, chairman of ACA, said: “Whilst we support the Government’s ambition to encourage wider pension coverage through auto-enrolment and personal accounts, the survey highlights the complete absence of a coherent plan to support existing quality schemes.

“The message is clear - good schemes are falling under threat from these well-intentioned reforms.

“This will mean an increasing number of employees currently in good schemes, and those joining from 2012, are set to receive pensions that fall far short of their needs.”

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