Mon, 28 Nov 2011

Small businesses given auto-enrolment reprieve

Small businesses will be given additional time to prepare for the implementation of automatic enrolment, the government has announced.

The timetable will be adjusted so that no small employers are affected by the reforms before the next general election.

Pensions minister Steve Webb said: “We recognise that small businesses are operating in tough economic times so we are softening the timetable for implementation to give them some additional breathing space.”

Under the revised timeline small businesses, defined as any organisation with less than 50 employees, will begin automatically enrolling staff in May 2015, instead of the current timing of April 2014.

But the National Association of Pension Funds (NAPF) has expressed disappointment that the scheme is being delayed further for smaller firms.

Play not pause

Joanne Segars, NAPF Chief Executive, said: “When it comes to pensions, the government should have stuck to plan A. These reforms have been a decade in the making, and now is the time to press play, not pause.

“Small businesses are absolutely critical to making these reforms work, because their staff are the least likely to have a workplace pension. This decision also risks creating competitiveness issues where small firms are competing with larger companies who are going ahead with auto-enrolment.

“Businesses will quite rightly be wondering how much faith they can have in the system, and whether more upheaval is in the pipeline.”

Under the scheme half of all workers will still be automatically enrolled before the end of the current Parliament.

The rate of pensions contributions will remain unchanged until all businesses have started automatic enrolment.

See also:

• Payroll professionals warned not to give pensions advice
• Call to scrap pension ‘gobbledegook’ ahead of auto-enrolment
• Ceridian warns employers their systems may fail to comply with auto-enrolment - resulting in fines and prison sentences