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&#3924,000 firms breaking the law over pensions&#39

Nearly 24,000 UK firms with up to 1.28 million employees are breaking the law by not providing access to a pension scheme, according to research by Axa.

The survey found that 16 per cent of the UK&#39s 147,000 biggest companies, those with an annual turnover of at least £1m, are failing to meet their statutory requirements of providing employee access to a scheme. Under current law, any firm with more than five staff must provide access to a scheme.

The survey of 147,000 companies shows that a quarter of the 37,000 firms employing between 11 and 25 people with turnovers of £1m-plus do not provide access to a scheme.

Twelve per cent or 7,560 of the 63,000 firms with between 26 and 100 employers and 5 per cent or 2,350 of the 47,000 firms with over 101 employees fail to provide access to a scheme.

The survey also reveals that out of 123,000 company schemes in place, 78 per cent or 96,000 have less than 100 members. Seventy-one per cent of these schemes, or 87,300, are on a defined-contribution basis.

Axa says its findings offer IFAs a major opportunity to market their services to companies and raise awareness of firms&#39 duties as well as the need for retirement planning in general.

Head of pensions marketing Steve Folkard says: “This is a major issue requiring urgent action. It seems that companies of all sizes are unaware of their legal responsibility to provide access to a pension scheme.

“Although the survey has some positive findings, the overall impression is that for many companies, pensions are not a high priority. Many firms do not appear to be aware of basic information such as admin costs and contribution levels are often very low.”


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