Most schemes 'will fail personal accounts exemption test'

By Tom Farley, Thu 4 Sep 2008 - Published in Pensions

Most firms' existing pension schemes will not pass the personal accounts exemption test, new research has found.

A survey by the Association of Consulting Actuaries (ACA) polled pension trends in companies with 250 or fewer employees.

It found that while personal accounts and auto-enrolment into pension schemes should increase coverage within smaller businesses, the new reforms are likely to cause many to close.

More than half (55 per cent) of the firms that responded to the survey said their schemes would not pass the personal accounts exemption test, with over 60 per cent paying lower contributions than proposed for personal accounts.

This was especially the case among the smallest businesses.

ACA chairman Keith Barton said that the government's benchmark for smaller firms might be set too high.

The government's personal accounts scheme, due to start in 2012, involved automatic enrolment with optional log-out.

It is described as a "trust-based defined contribution occupational pension scheme" and will involve the government paying one per cent in tax relief.

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