|
ACA: Personal accounts will have mixed effect on smaller firms' pension provision
8 September 2008 11:00
The level of contributions required in personal accounts could prove too high for smaller businesses, a new report by the Association of Consulting Actuaries (ACA) has warned.
Present pensions coverage among smaller companies is clearly below adequate, with four out of five of them not offering any form of scheme at present, while the ACA's poll also highlighted huge scaling down in their provision of defined benefit pensions.
However, over half of these firms that do offer a scheme believe it will fail to pass the personal account exemption test, with more than three out of five stating that their contributions to their schemes are below the three per cent stipulated in the new regime.
As a result, one in three smaller businesses expect to either have to cut their scheme's benefits or replace it with a personal account, while the smallest firms anticipate that over two in five of their employees will choose to opt out of them, largely due to affordability.
ACA chairman Keith Barton asserted that the government may have set its contributions benchmark for personal accounts too high, as well as that the condition the economy is in when they are rolled out in 2012 will significantly influence how effective they are.
|
