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The vast majority of SMEs do not offer workplace pension schemes, according to a survey by advisory body the Association of Consulting Actuaries (ACA).

Figures show that eight out of ten small businesses have no scheme in place. Of the 394 SMEs surveyed, 91 per cent report that they have now stopped salary-related contributions to employees – in contrast to only 18 per cent in 1992.

Keith Barton, chairman of the ACA, says: ‘[The figures] 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 findings indicate that SMEs will be hit particularly hard following government pension reforms, which will see all employees enrolled in a national pension scheme in 2012.

Under the reforms, employers will be required to contribute a minimum of three per cent of their earnings, with a further four per cent contributed by the employee and one per cent from the government in the form of tax relief.

David Robertson, secretariat at the ACA, says: ‘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.’

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