ACS

With the Government proposing to introduce fundamental changes to the way in which people save for their retirement, the Association of Convenience Stores (ACS) is leading the response of the small shops sector.

ACS Chief Executive David Rae said: “Taken alongside the rapid increases we have seen in the National Minimum Wage and the extension of paid holiday entitlement, the proposed employer contributions to pensions represent a significant cost burden to local shops.

“We have modelled these costs for typical convenience stores, and pensions alone are likely to represent an addition to wage costs of over 1%. That can be make or break for small shops”

The Government is proposing a national pension scheme into which people would be encouraged to pay. One of the key features of the proposals is a requirement for employers to pay contributions of 3% of employees’ salary into the scheme.

Mr Rae said: “The proposals being made by Government will affect retail businesses for generations to come. We are asking retailers to make their voice heard now, or they risk being ignored in this critical debate.”

The “Security in Retirement” white paper argues that the 3% employer contribution should apply to wages between the lower earnings limit and the higher rate income tax band. Employees would have the right to opt out of the scheme.

ACS has drafted a submission which is critical of the Government’s lack of detailed research into the costs of these proposals for the convenience store sector. For example, the Government assumes that between 20% and 50% of employees will opt out of the pension scheme, but it is unclear how this very broad assumption applies to the small shops sector.

David Rae continued: “The Government needs to do far more analysis. While we are playing our part in crunching the numbers to arrive at the likely costs for the sector, the onus must be on the Government to come up with a credible estimate of the costs of these proposals.

“What our work does make clear is that small shops would suffer disproportionately from these proposals.”

ACS also argues that there is a lack of focus in the Government’s thinking around the impact of these plans on small retailers themselves.

David Rae added: “We know that, unfortunately, retailers can retire into poverty themselves, particularly if they have been unable to pass on their business to a family member, or if they have been unable to sell their business for a profit on retirement. The Government must think more clearly and carefully about supporting the self-employed in retirement, as well as looking after employees.”

ACS has produced a draft submission in response to the Government’s plans for pensions. This is available to retailers on request from Shane Brennan on 01252 515001. The Government’s consultation closes on 11 September.

Contact

Rachel Lawson
ACS Communications Co-ordinator
01252 515001