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Government announces revised timetable for smaller employers to auto-enrol staff into pensions

David Woods , 26 Jan 2012

Pensions minister Steve Webb

A revised timetable for when employers of all sizes must start enrolling their staff in a workplace pension has been set out by the Government.

Large employers, those with 250 or more employees, will not face any change in the date they are due to start enrolling their staff.

This follows the announcement in November that small businesses would be given more time to prepare for automatic enrolment to help them out in exceptionally tough economic times.

The timetable for employers to begin enrolling their staff starts with the largest firms first, followed by medium, then small companies.

Automatic enrolment will begin in October 2012. All existing firms will have enrolled their staff by April 2017, followed by all new employers by February 2018. This new timeline means that 70% of individuals will be automatically enrolled before the next general election.

The level of pension contributions will be phased in over time to help employers and individuals adjust. Full contributions will have to be paid from 1 October 2018.

Minister for pensions Steve Webb (pictured) said: "Automatic enrolment will begin on time this October, taking up to 10 million people into pension saving, many for the first time ever, and all employers will be part of it.

"We have done all we can to ease any burden on business the reforms will bring and employers of all sizes now know the date they need to start enrolling their staff."

Joanne Segars, NAPF chief executive, said: "We are pleased that the Government has spelled out a new timetable for auto-enrolment. This will provide the clarity that businesses need to get on with preparing for these important changes.

"Now the Government needs to stick to the new timetable and avoid last minute changes that will undermine the success of the reforms. There have been too many delays already.

"These reforms are a once in a generation opportunity to help tackle the UK's pensions savings crisis. But they require a lot of preparation. Employers need to make important decisions on how to fund the new pensions and what type of schemes they will use. They will also have to decide how they will manage the costs, and how they will set up the payroll."

Alan Morahan, Principal at Punter Southall, added: "We're pleased that some employers now have clarity on their staging date. Larger employers and their advisers were frustrated that they could not plan for automatic enrolment with absolute certainty - although medium-sized and smaller employers are still in limbo, with their exact dates still to be issued.

"These dates were one item outstanding; the other is the final regulations which we understand are imminent. For many employers there is still much to do and time is marching on. For those larger employers that already had projects underway a delay would have been an annoyance with very little to be gained, although they will welcome the change in the contribution phasing. Those that hadn't started now know the clock is ticking and they need to get started.

"For smaller employers, the delay is likely to be welcomed, particularly given the tough economic climate that they're operating in and Steve Webb should be credited for listening to the cries from this section of the employer community."

Robin Hames, head of technical, marketing and research at Bluefin Advisory Services, said: "It is vital that employers now revisit their planning and determine the latest date by which they have to comply with the regulations. However, it's equally important that they consider their options fully.

"People often forget that these staging dates are the very last moment for commencement compliance - employers can, and should, consider whether an earlier date would better suit their broader business needs. Employers may wish to consider whether other significant dates such as salary review, flexible benefits election windows or other HR events would be more appropriate points at which to commence automatic enrolment.

"It is pleasing to note in the minister's statement that the staging dates for medium to large employers (those with 250 to 3,000 employees) will not now be delayed as was previously suggested. While the delay for SMEs is disappointing, as long as legislators stick to this revised timetable and retain certainty that these reforms will be implemented, we can get those employers who paused their planning back on track."

A consultation and draft regulations with more detailed information will be published shortly.

 

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