Auto enrolment delayed

Posted on November 28th, 2011 | Categories - News

The Department for Work and Pensions (DWP) has confirmed this afternoon that the dates by which smaller companies will have to automatically enrol their employees into work place pensions will be pushed back.

Original auto enrolment plans

Under the original auto enrolment plans companies with less than 50 employees would have had to start automatically enrolling employees into workplace pension schemes from April 2014, this has now been pushed back to May 2015, beyond the end of the current parliament.

When fully implemented the plans will see all employees automatically enrolled into work place pensions, to which they and their employer will have to contribute.

Delay

The move to delay the implementation date has been made to try and ease the burden on smaller companies when the economic recovery is still fragile and trading conditions difficult.

However, the postponement will mean that some seven million workers will have to wait for the opportunity to benefit from employer pension contributions. Although according to the DWP at least half of all workers in the UK will still be automatically enrolled into schemes as the dates for larger firms to implement the changes have not been changed.

The move comes after publication of the Beecroft report, which recommended that implementation of auto enrolment be delayed and also the Department for Business admitting that auto enrolment would cost employers £3 billion to implement.

Minister for pensions Steve Webb (right) said: “Our society and economy needs to be based on a foundation of saving, not debt. Automatic enrolment will help millions save, and to not act will leave people poorer in retirement. That is why I am confirming today that automatic enrolment will start on time and all employers will be part of it.”

He continued: “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. This is a sensible step that ensures long term pension issues are addressed while meeting the short and medium term needs of small business.”

Mr Webb said that there would be no further delays to the implementation program, nor will there be any changes in the proposed contribution levels.

Many pension experts have endorsed the move by the government, pointing out that adding another burden to small businesses will do nothing to help the economic recovery. However, some experts have also been keen to emphasise that the delay cannot be indefinite and that the UK needs to start addressing the pension shortfall sooner rather than later.