Barriers to pension scheme participation in small- and
medium-sized enterprises

Alistair Byrne, David Blake and Debbie Harrison


Large sections of the UK population are failing to make adequate provision
for their retirement, and one area where provision is notably poor is among
people working for small- and medium-sized businesses (SMEs). Information
was gathered from interviews with individuals from a wide range of
organisations active in the pensions market, for these companies to shed
light on the particular barriers to pension scheme participation in this sector
in which over 40 per cent of the working population is employed. It was
found that many finance directors are sceptical of the benefits of providing
pensions for their employees and deliberately structure their pension schemes
to avoid high participation rates. It was also found that financial advisers
and pension providers are reluctant to promote pensions in companies where
they perceive the management to be unsupportive and where there is no clear
profit margin. The authors suggest one way in which management could be
motivated to encourage pension scheme participation among their employees.

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