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How SMEs can avoid the looming pension crisis

News that over 20% of British workers have no retirement savings plan is certainly shocking but this isn’t the only pension crisis. For many SMEs, the cost of auto enrolment is breaking the bank. Alternative finance can help.

According to a new survey by Printerland, more than one in five workers aren’t putting money aside for their retirement. Of those that are, only 80% have a good idea how much money they’ll need when they stop working. Yes, the figures suggest that the auto-enrolment scheme still has much ground to cover, but what about burden on small businesses?

Ensuring that every worker has a good enough pension to retire on is without doubt a good thing, but when it comes to achieving this goal, the equation isn’t black and white. Signing up to auto enrolment and complying with its regulations is putting a strain on small business finances at a critical time. Not only are business owners facing market headwinds, caused in part by the decision to the leave the EU, but also a range of other demands on their capital, including costs relating to cybersecurity, the living wage and apprenticeships.

Put too much pressure on finances and there’s a real danger the back of small business in Britain could be broken. Nobody wants the government’s engine for economic growth to blow a gasket. This is where alternative finance can help and play a vital role in maintaining cash flow and enabling investment and grow.

Alternative finance, which is also known as non-bank finance, is thriving as traditional lenders remain cautious. News that asset finance is taking increasingly big bites of the SME finance market share of bank overdrafts is testament to this trend, as is the recent announcement that the government-backed Start Up Loans Company has passed the £300 million mark in loans to micro-businesses since it was established in 2012.

The alternative finance sector is reporting landmark achievement after landmark achievement, and this is very significant. With the pressure on business owners, including in terms of auto-enrolment requirements, raising awareness of funding options is critical. The better SMEs can manage pension scheme costs, the easier it will be to reduce the number of workers without retirement savings.

To find out more about A&T Business Associates services, contact us on 01903 602211 or info@atbusinessassociates.co.uk.

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