The Royal Association of British Dairy Farmers (RABDF) has urged producers to introduce a provision of 0.34p/litre into the accounts in order to provide sufficient pension for their retirement.
The figure was a result of work by independent pension specialist, Hargreaves Lansdown, and an RABDF Retirement Provisions Survey, revealed at last week’s Dairy Event and Livestock Show. It found that although most farmers were already saving money in personal and/or private pensions, many were on course to achieve just 15% of their pre-retirement earnings in retirement. That compared with a minimum of 50%, or 72% to live comfortably, suggested by Pensions Commission research.
“This is because the vast majority, 85%, of them [dairy farmers] are self-employed, and therefore do not receive an employer’s pension contribution worth on average 6% of salary,” RABDF chairman, Lyndon Edwards explained. “Worse still, being self-employed means they forego any entitlement to State Second pension, worth about £3,500 a year from age 65.”
Including the 0.34p/litre pension provision in accounts would take total labour cost (hired and family), from 7.9p/litre up to 8.24p/litre for a typical 150-200 cow unit – enough to provide a pension of 50% of final salary for both farmer and their spouse.
“We trust that accountancy firms together with the entire dairy food chain, including retailers, processors and government, will accept this latest data and fully understand the real role and financial value of family labour,” Mr Edwards said. “After all, the majority of dairy units continue to be family owned and run.”