Pension contributions for small business workers have barely changed in more than ten years, according to the Association of Consulting Actuaries (ACA).
The ACA's annual survey on pension trends also found very small firms, a major target for the Government's auto-enrolment scheme due in 2012, expect high opt-out levels when Personal Accounts are introduced.
Around 91% of defined benefit (DB) schemes for businesses with less than 250 employees have closed to new entrants, the ACA found, compared with just 18% in 1996.
ACA's chairman, Keith Barton, is concerned the mass closure of DB schemes has not resulted in increased investment in defined contribution (DC) schemes, despite greater longevity and low returns.
Combined employer and employee contributions for very small firms, with less than 50 workers, haven't changed since the survey started twelve years ago at less than 8% of earnings.
Furthermore, around 45% of employees of very small businesses are expected to opt out of auto-enrolment in Personal Accounts or approved workplace schemes following the implementation of the Pensions Act in 2012.
Barton says the Government needs to take action to increase pension savings to prevent problems in the future.
"We need some serious new incentives to encourage higher levels of corporate and employee pension saving to levels well above 8% of earnings - realistically a figure of at least double that is needed to provide anything like a comfortable retirement," he says.
"This is going to be a real challenge given the fiscal tightening likely in the period ahead, but it has to be addressed."
The ACA says the reforms outlined in the Pensions Act do not go far enough to deal with Britain's growing pensions crisis, and says an increase in future taxes to pay for today's fiscal stimulus may damage the Government's goals of increased pension provision for all.
Contact: John Bakie, Tel: 020 7484 9805, e-mail: [email protected]IFAonline
Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till