UK - All small to medium-sized firms will axe their final salary schemes because deficits will limit their ability to raise capital, KPMG predicts.
It points out many companies are having to pay extra contributions into their schemes to manage their deficits. But banks and financiers are regarding these contributions as equivalent to loans, making it harder for SMEs to raise finance.
However, KPMG head of middle markets Mel Egglenton claims recent proposals to give employees the right to work until they are 70 could help ease pressure on the SME sector.
“If employees work for longer, it puts off the day of reckoning for the company in terms of having to start paying the pension,” she said.
The Federation of Small Businesses said raising capital was a major issue for the 10% of small firms which operated final salary arrangements for their staff.
This week's top stories included Cardano announcing plans to acquire Now Pensions from a Dutch pension fund later this year.
Royal Bank of Scotland (RBS) faces a £102m impact on liabilities as a result of equalising guaranteed minimum pensions (GMPs), according to its annual results.
Malcolm Mclean says getting the channels of communication right and engaging more openly is a good starting point