Wed, 25 Jan 2012
Auto-enrolment timetable changed to provide “breathing space” for small businesses
In a move that has drawn criticism from unions the government has announced that the timetable for auto-enrolment will be adjusted so that small businesses are not affected by the reforms until after the next general election.
Pensions minister Steve Webb said the changes would “provide them [small businesses] with some additional breathing space to prepare for the reforms whilst operating in tough economic times”.
However, unions have criticised the decision. TUC General Secretary Brendan Barber said: “This is a deeply disappointing delay. Everyone agrees that we face a pensions crisis, with two out of three private sector workers not in any kind of workplace pension.
“Yet successive governments have delayed the introduction of auto-enrolment and the new system will not now be fully in place until three years after the next general election.”
An increase in the minimum rate of employer pension contributions from 1% to 2% of banded earnings will also be delayed from October 2016 to October 2017. Contributions will increase to 3% from October 2018.
“Today’s announcement does not just hit the staff of small employers. What’s worse is that even workers auto-enrolled this year will now have to wait until the end of the staging process before they get their full contribution,” said Barber.
Staging dates
Under the revised timeline, all employers with an existing staging date of on or before 1 February 2014 are unaffected.
Medium sized employers will be re-allocated automatic enrolment dates between 1 April 2014 and 1 April 2015. This means that the implementation dates of some of these employers will be up to nine months later.
The government claims that around 70% of eligible workers will nevertheless be automatically enrolled before the end of this Parliament compared with around 75% under previous arrangements.
Small employers will be allocated automatic enrolment dates between 1 June 2015 and 1 April 2017.
New employers setting up business from April 2012 and up to and including 30 September 2017 will have automatic enrolment dates between, and including, May 2017 and February 2018.
And any new employer setting up from October 2017 onwards will be required to comply immediately if paying earnings which attract PAYE deductions in respect of any worker.
See also:
- ‘The perfect payroll storm’ - how PwC views auto-enrolment and RTI
- Small businesses given auto-enrolment reprieve
- NEST publishes pension auto-enrolment guide
