Group personal pensions are now the preferred type for firms employing up to 250 people, according to the latest Association of Consulting Actuaries survey.
The survey looked at pension trends in firms employing 250 people or less and found that 90 per cent of these firms will have reviewed their pension scheme arrangements over the last two years.
The GPP is now the most popular type of arrangement, with 44 per cent of firms offering it in addition to alternative pension arrangements, and 25 per cent only offering a GPP. The average combined employer and employee contributions are 8.6 per cent into this scheme.
Stakeholder schemes have been established by 37 per cent of firms either alongside other arrangements or as stand-alone schemes. Forty-four per cent of these schemes are not getting an employer contribution and the average combined employer and employee contributions are just 4.8 per cent of earnings into the schemes.
Only 36 per cent of defined-benefit schemes, offered by 29 per cent of firms, are open to new members, but combined employer and employee contributions into defined-benefit schemes are up by 2.1 per cent on a year ago to 21 per cent of earnings.
The survey shows that a few firms are increasing employer contributions marginally into defined-contribution arrangements (usually by 1 per cent or less), but few employees are increasing contributions and some are reducing them.
ACA chairman Gordon Pollock says: “Smaller firms represent more than half of the UK in terms of employment and business turnover, so it is important that we monitor what is going on in pension terms. The trend decline in defined-benefit mirrors what has gone on in larger firms, where they were always more prevalent. However, it is encouraging how many smaller firms and their employees are keeping these arrangements going.”