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Two-thirds of small employers do not offer pension schemes, while others have failed to keep up with the cost of providing sufficient contributions.
This is according to a survey of small firms conducted by the Association of Consulting Actuaries (ACA), which also found that one-fifth of companies with less than 250 employees plan to close their existing schemes and put all workers into the National Employment Savings Trust (NEST), once the Government's auto-enrolment policy comes into force.
From October 2012, employers will have to auto-enrol workers into a qualifying pension scheme and make mandatory contributions. Staff will be able to opt out after enrolment.
The survey also found that most defined contribution schemes run by smaller firms attracted combined contributions of less than 8% of earnings, the minimum contribution required under the new auto-enrolment policy, and have "failed to keep pace" with the cost of building sufficient pensions.
However, small firms expect 35% of staff to opt out of pension plans, with 84% blaming low uptake on cost and two-thirds on staff being "disillusioned with pensions".
Stuart Southall, ACA chairman, said: "Pension contributions into most schemes reporting to this survey need to double on average to at least 15% of earnings if reasonable retirement incomes are to be achieved."
"Greater transparency and low-cost products will play a part in this, as will better consumer financial education and auto-enrolment - all of which is 'work in progress' with some areas more advanced than others, but more will be needed."
The TUC's general secretary, Brendan Barber, warned that any back-tracking on the auto-enrolment legislation would be "a disaster" for workers who do not currently save for their retirement.
"Most people in the UK work for small businesses so the finding that two-thirds aren't providing staff pension schemes shows just how dire our savings crisis is - and why we need auto-enrolled pensions," he added.
The ACA survey gathered responses from 404 employers with 250 or fewer employees.
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