Almost half of small and medium sized companies have no company pension schemes in place and should prepare for the pending pension reforms now to avoid cashflow problems later on, it has been claimed.
Businesses are set to face increasing pressure to enrol all eligible employees automatically into a pension scheme and contribute towards their retirement when the Pensions Act 2008 comes into force in 2012. However, a new survey by Sage, the business software supplier, found that 46% of firms have no scheme in place.
The survey which gathered responses from 1,500 small business owners also shows that a third (33%) are unaware of their responsibility to provide a Qualifying Pension Scheme as a result of the changes.
In addition, 54% of business owners mistakenly believe the Pensions Act will have no impact on their business.
Kathryn Shankland, product manager in Sage’s Small Business Division, says business owners must understand how the reform will affect them and make sure they are aware of the minimum requirements.
She said: “If business owners are aware of the changes early enough and factor them into their plans and forecasts, it’s possible for firms to continue to grow their business and provide support for their employees’ futures.”
The new pension reforms will impact all UK employees who earn more than the minimum earnings threshold, currently £7,475, and are aged between 22 and the current state pension age of 65. According to the Federation of Small Businesses, a company with four employees each earning £25,000 will face additional costs of £2,550 per year.
© Crimson Business. Ltd 2011