The automatic-enrolment system, to be introduced in 2012, might result in the closure of many workplace pensions schemes.
The government's upcoming personal accounts scheme could lead to other forms of retirement savings provisions being reduced.
This is the claim of new research from the Association of Consulting Actuaries (ACA), which foretold widespread cutbacks in generous workplace schemes for UK employees. Personal accounts, to be introduced in 2012, will effectively form a competing - and cheaper - workplace pensions option, the report added.
Research conducted by the ACA has shown that 31 percent of firms that retain less than 250 employees would either reduce the benefits of their own scheme following the launch of personal accounts, or close them entirely.
Despite this predicted trend, the actuarial body admitted that overall retirement savings in the UK would go up thanks to the scheme, with the auto-enrolment built in to personal accounts causing many more people to receive a workplace pension. Nevertheless, around 40 percent of employees are estimated by employers to ask to opt out of their personal account, because they see the savings as taking too much out of their paycheques.
ACA Chairman, Keith Barton, said: “Our latest survey in the sector points to the huge challenges there are in achieving wider pension coverage in smaller firms. The viability of running a low-charge scheme across over one million employers, with minimal red tape, also remains to be resolved.”
ACA asked 394 small businesses about personal accounts over the course of its research.
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