45,000 small businesses in the South West are set to gift the government a potential £2.2 billion
2 October 2001
45,000 small businesses in the South West are set to gift the government a potential £2.2 billion
With a week to go, 69% of small firms still have no
pension scheme in place. In today's economic climate
can they afford risking up to a £50,000 fine each?
With just a week to go, 45,000 (69%) of small businesses in the South West (turnover of £50,000 to £1 million) have still to meet the government's company pension deadline, according to research done on the 7th September by IFA Promotion. Whilst over three quarters (78%) businesses are now aware of Stakeholder pensions, over a tenth of target firms are still in the dark about the 8th October deadline. Worse still 24,000 (38%) remain unaware they face a £50,000 fine for not designating a scheme on time, leaving themselves open to a potential £2.2 billion worth of fines from the pensions regulator, OPRA.
Research amongst small enterprises, published today by IFA Promotion, the organisation promoting the benefits of independent financial advice, also reveals that the smallest businesses could be amongst the worst hit with over half nationally (53%) oblivious to the prospect of a potentially crippling fine.
David Elms of IFA Promotion said, "Such 'blissful' ignorance could spell real trouble for thousands of small firms looking to limit their overheads to survive the current economic downturn. Many small businesses are struggling already with sales down, profits under pressure and large-scale redundancies being announced. Yet it's these firms that are least aware of the potential fines and likely to be hardest hit by them."
Elms continued, "Whereas many employers may be put off by the perceived hassle and expense of setting up a company pension scheme, just a couple of hours spent with an IFA could avoid this costly fine."
The research also revealed that amongst small businesses effected by Stakeholder requirements in the South West:
- 73% of businesses do not want to see contributions made compulsory for employees or employers.
- When setting up stakeholder schemes, 83% of those asked would take advice from an IFA.
- 13% of businesses admitted they were delaying making a decision about their pension until the last minute.
- 69% of businesses still do not offer a pension for their staff.
- Almost three quarters (71%) of businesses have no intention of contributing for their employees.
IFA Promotion is urging firms who have not yet designated a scheme to seek independent professional advice as to which pension scheme would be most suitable for their employees.
Businesses can get hold of a free guide - Independent financial advice for your business - including useful information on company pensions by calling 0800 085 3251 or visiting www.unbiased.co.uk. In addition, callers will receive details of local independent financial advisers offering corporate financial advice.
- ENDS -
For further information please contact:
| David Elms CEO IFA Promotion 020 7833 3131 |
or | Shellie Wells / Pippa Russell Lansons Communications 020 7490 8828 |
Notes to Editors
The Undiscovered Billions research was conducted for IFA Promotion by independent research agency, RAKM. It is the fourth report examining the value of cash or assets that could be recovered by better planning or that have been forgotten, lost or simply never claimed. The organisations and institutions, which find themselves, sometimes unwittingly, guardians of these chattels attempt to reunite the individuals with their property, however, the numbers of people involved and the value associated continue to grow. Each of the previous investigations carried out by IFA Promotion have discovered additional situations where people lose track of cash or assets; while renewed investigation of previously identified areas, have seen significant changes in the amounts that have been misplaced and the number of people affected.
Each of the sections examined in this report have been investigated by researchers from RAKM, and the data used in the calculations has been obtained from a number of different sources; trade, government, industry bodies and the institutions that hold the assets themselves. In some cases the amount held on behalf of an individual is easily defined, as are the numbers of people involved, while in other cases the amounts may be easily definable but the number of people who have a claim on the assets are unknown.
In situations where the assets concerned are stocks and shares, RAKM International has calculated the value using prices quoted in the Financial Times on the 27th of July 2001.
Key underlying factsSeveral sections of the report examine ways in which people may be losing out by some of the uses they make of their money. Few people have the knowledge or experience to make the best financial decisions all the time, and as a result the majority of the population are losing out! Although, for many people the amounts may only be a small sum, if these amounts are left unattended for a long period they will grow. This category of loss we have called "Dead Money". In addition we are examining a second category that also looks at the way individuals may be losing out, this we have called "Buried Treasure". This category, represents money that belongs to or is owed to people, although they are probably not aware of its existence.
The basis for valuing the loss
The calculations we have used on the Lost Income and Missed Return elements of this investigation have been derived from the comparative performances of various financial products.
Comparative performance based on £1,000 invested over given periods to 1/3/01
|
1 year |
3years |
5years | |
|
FTSE A all share (xd) |
89.1 |
104.6 |
166.0 |
|
UK savings |
103.4 |
122.6 |
159.0 |
|
UK Retail Price Index |
101.9 |
106.7 |
114.0 |
DETAILED RESULTS OF THE RESEARCH
Dead Money
|
Lost Income |
Missed Return |
On a total of | |
|
£m |
£m |
£m | |
|
Total |
2,450 |
2,118 |
- |
|
Deposits in dormant or obsolete accounts |
156 |
- |
5,300 |
|
Unnecessary/Expensive borrowing |
765 |
1,530 |
16,500 |
|
Inheritance put into banks/building societies |
- |
69 |
4,040 |
|
National savings on extension rates |
38 |
- |
1,509 |
|
Pensions - lost track of |
302 |
- |
- |
|
Insurance (home & motor) |
525 |
- |
- |
|
Old notes and coins |
30 |
- |
332 |
|
Cash float |
94 |
- |
2,212 |
|
Holiday currency losses |
252 |
- |
- |
|
Life assurance maturities put onto ordinary deposit |
- |
138 |
2,000 |
|
Early surrender of life products |
- |
258 |
3,200 |
|
Annuities-poor choice (new buyers only) |
6 |
- |
- |
|
Unclaimed flotation benefits |
- |
123 |
24,600 |
|
Unused company benefits |
282 |
- |
9,409 |
Buried Treasure
| Benefits |
£m paid |
£m not claimed |
% unclaimed |
|
Total |
26,075 |
2,530 |
10 |
|
Housing benefits |
10,150 |
400 |
4 |
|
Income support |
10,835 |
945 |
9 |
|
Family credit |
2,660 |
640 |
24 |
|
Council Tax benefit |
2,430 |
545 |
16 |
|
Jobseekers allowance |
2,570 |
660 |
25 |
|
Other assets |
Capital sum |
Lost income |
|
£m |
£m | |
|
Total |
2,943 |
210 |
|
Stocks and shares** |
1,600 |
128 |
|
Income tax |
300 |
10 |
|
Unit trusts** |
628 |
50 |
|
Intestacy |
185 |
6 |
|
Life assurance |
125 |
8 |
|
Friendly Society |
43 |
4 |
|
Premium bonds - unclaimed prizes |
20 |
1 |
|
National Lottery - unclaimed prizes |
41 |
1 |
|
Bookmakers - unclaimed prizes |
1 |
* |
|
Rent a Room |
- |
2 |
* less than £500,000;
** Holdings not holders Source: RAKM for IFA Promotion
Independent Financial Adviser Promotion
Independent Financial Adviser Promotion Ltd. was established in 1989 to promote the value and accessibility of independent financial advice to the public. It represents nearly 10,000 firms of independent financial advisers across the UK and is sponsored by 32 leading financial institutions.
IFA Promotion's central belief is:
"Consumers have a right to financial advice that is independent of the providers of financial products - i.e. independent financial advice."
Furthermore independent financial advice should be:
- Affordable. The option to take independent financial advice should be available, by right, to all - not just the wealthiest in society
- Convenient. IFAs should be available in the location of the consumer's choice, wherever they live in the UK.
- Transparent. It must be clearly transparent to consumers who is able to offer independent financial advice and who is not.
| AXA Sun Life Barclays Global Investors Funds BUPA Canada Life Clerical Medical Investment Group Dresdner RCM Funds (UK) Ltd. Eagle Star Family Assurance Friendly Society Ltd Friends Provident INVESCO Fund Managers Ltd Investec Asset Management Legal & General Merrill Lynch Investment Managers National Mutual National Savings Norwich Union Life |
NPI |
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