SMEs baulk at pension plan's costs
MORE than half of small firms claim the UK government's plans for auto-enrolment into workplace pensions will add significantly to their costs, according to a report to be published today.
Just 54 per cent of firms with 250 workers or fewer say they will support the reforms and expect more than one-third of their employees to opt out of the new pensions, a survey by the Association of Consulting Actuaries (ACA) found.
It revealed that 53 per cent of smaller firms think the reforms will have a significant impact on costs, with three-in-ten likely to reduce their contributions to pensions in order to meet the extra costs.
Under the rules, currently being reviewed, workers at smaller firms will from 2014 be automatically enrolled into their employer's existing pension or into the National Employee Savings Trust (Nest), with the right to opt out.
The ACA said two-thirds of small firms do not currently offer their employees a pension scheme, while one-fifth said they would either close or restrict access to their existing scheme and auto-enrol employees into Nest.
Stuart Southall, ACA chairman, said: "The cost of pensions to both employees and employers is the 'big issue' that has prevented the extension of pension provision to date in the sector.
"While auto-enrolment may break the mould, if we are all still paying higher taxes to recover over-spending, it's difficult to see how this will not bump up opt-out rates."
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