A revised timetable published by the Department of Work and Pensions (DWP) yesterday confirmed that full implementation of workplace pension reforms will not be in place until October 2018, three years later than was originally planned.
The workplace pension reforms are designed to encourage millions more to save for retirement, and include the phasing in of obligatory auto-enrolment and employer pension contributions for all eligible job-holders.
Businesses will have a different set of deadlines according to number of employees, the largest companies will need to begin phasing in auto-enrolment from October 2012, followed by medium and small companies across the next five years. All eligible job-holders will need to be auto-enrolled in a suitable pension scheme by April 2017 according to the revised timetable.
Once auto-enrolment is implemented in a company it will need to be followed by a phasing in of pension contributions which will happen in stage to allow for budget adjustment. All employers must offer eligible job-holders the equivalent of at least 3% of pensionable earnings, with a tax relief of 1% and job-holders themselves contributing a further 4%. Although job-holders will be automatically enrolled they will be able to opt-out should they wisgh to do so.
According to the DWP 70% of employees should be auto-enrolled by the time of the next general election.
All changes will need to be implemented by October 2018 under the revised timetable. As of October 2017 all new employers will have an "immediate duty" to fully comply with new pension law.
Revisions to the timetable will not affect employers with more than 250 employees. The government hope that the new delay will further assist smaller companies in dealing with a tough economic forecast.
Minister for pensions Steve Webb 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."