Press Release
Compulsory pension contribution would cripple small businesses
Almost half (45%) the UK’s small and medium-sized businesses would see a significant dip in profits if the Turner Report’s compulsory pension contribution were to come in to force, research from specialist cash flow provider Bibby Financial Services has revealed.
Under the Government’s proposed National Pension Savings Scheme (NPSS), businesses without their own contributory scheme in place – which accounts for one in three (36%) of the UK’s small business community – would have to enrol all employees on the NPSS and make a compulsory 3% contribution to each individual’s pension fund.
In addition to the 45% of business owners and managers who were concerned about the effect on their bottom line, almost a third (32%) said the compulsory contribution would hinder their expansion plans, while one in three (31%) would rein back further investment in business growth.
The introduction of the NPSS would also directly impact on the employees as 43% of business owners and managers would revise their pay review policies, a third would (33%) slow down their recruitment drive and one in five (21%) would cut back on existing staff benefits in order to recoup the cost of the new scheme.
“With Lord Turner himself admitting that the NPSS would cause operating costs to rise by 1% for small and medium-sized enterprises compared to 0.4% for larger organisations, the Government clearly needs to reconsider its plans and consider the impact the 3% contribution will have on the UK’s small business community”, said David Robertson, chief executive of Bibby Financial Services.
“Business owners and managers make a significant contribution to the economy and any demise in their prosperity could have a serious knock-on effect across a wide range of industry,” Robertson added.
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