· News

Small businesses to be given longer to prepare for pensions auto-enrolment

The Government confirmed that automatic enrolment will begin on time in autumn 2012, but small businesses will be given additional time to prepare for the implementation.

The timetable will be adjusted so that no small employers are affected by the reforms before the end of this Parliament.

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

Minister for pensions Steve Webb (pictured with NAPF chief executive Joanne Segars) 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.

"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.

"We are committed to ensuring the employees of these small businesses get the chance to save and that is why no one will miss out."

Under the revised timeline, small business would begin automatically enrolling their staff in May 2015, instead of the current timing of April 2014. Half of all workers will still be automatically enrolled before the end of this Parliament.

But Joanne Segars, NAPF chief executive, said: "It's welcome that auto-enrolment is still starting in 2012 and it's also a relief that all employers will be covered one day, regardless of their size.

"But we're disappointed by the further delay for smaller firms. 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.

"The Government needs to restore some trust in these hugely important changes. The UK simply isn't saving enough for its old age, and we have to get these reforms right."