ACA: A third of small firms to cut pensions
Sep 05 2008
Almost one third - 31 per cent - of small businesses intend to cut their pension provision when the new Personal Accounts are introduced in 2012, according to the Association of Consulting Actuaries (ACA).
With Personal Accounts, employees will be automatically enrolled into pension schemes, with employers having to donate three per cent of workers' salaries into the fund.
A common reason given by firms for having to reduce their own pension provision was that more employees would be enrolled in pension schemes, meaning that the cost would need to be mitigated by reducing everyone's payments.
The ACA research, which questioned 394 small firms, shows that employers at the companies with fewer than 250 staff expect up to 40 per cent of them to opt out of the scheme for financial reasons.
Rachel Vahey from Aegon UK agrees, saying Personal Accounts will be a competitor for other pensions and will be likely to make it impossible for employers to use private schemes.
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