The government this week announced a further delay in its Auto Enrolment program, meaning many workers will have to wait for much needed employer pension contributions.
Auto enrolment delay
Originally the government had intended that the Auto Enrolment program, which will force both employees and employers to contribute to a work place pension, would have been fully rolled out by 2016.
Auto Enrolment was supposed to help those people who had not yet save enough for their retirement, by forcing employers to contribution on their behalf.
However, pensions minister Steve Webb (right) has confirmed that there will now be a two year delay, with the scheme not coming into force for smaller employers until 2018; larger employers with more than 50 workers will have to stick with the original timetable.
Experts believe that the government have delayed implementing the changes to help small businesses who would have been hit hard, during tough economic times, by the additional cost.
However, the delay means that it will be a full 16 years between the full implementation of Auto Enrolment and the Pensions Commission’s investigation into the problems of people not saving enough for their retirement.
Workers worse off
Despite the delay it is clear that the government are committed to implement Auto Enrolment.
However, financial experts are also concerned that the government’s decision will reduce future retirement incomes and that workers should not delay in starting to make provision for their retirement.
Rudi Smith, a senior consultant with Towers Watson, a respected firm of financial consultants, said: “Auto-enrolment was conceived against a backdrop of rising personal incomes and a growing economy. It will obviously be tougher for employers and employees to absorb the cost of contributions in today’s environment but paying for retirement is not getting any cheaper. The Government is saying there will be no further delays regardless of what happens to the economy and employers will have to plan on this basis.”