Auto-enrolment plans delayed for small businesses

The Momentum UK Team 28 November 2011

The government has today confirmed plans to delay auto-enrolment for small businesses, in a bid to ease the pressure of a tough economy.

The revision applies to small companies of up to 50 employees, giving them until May 2015 to comply with new pension regulations, instead of April 2011 as was previously announced.

Auto-enrolment for the larger companies should go ahead as planned from October 2012. The full details of the revision will be released in the new year.

Pensions minister Steve Webb who made the annoucement in a statement to the House of Commons earlier today said:

"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.

"Everybody who is due to be enrolled this side of July 2013 will see no change in their dates. We will publish a revised schedule early in the new year."

Although the changes may come as a relief to some small businesses, not everyone is happy with the proposed revision. Joanne Segars, Chief Executive of the National Association of Pension Funds said:

"Whilst carving out or pushing back the start date for small employers might have short term political temptations in the current economic climate, the longer term effects would be highly damaging to the nation's retirement prospects.

"When it comes to pensions, the Government must stick to Plan A. These reforms are a once in a lifetime opportunity to help tackle the UK's pensions saving crisis. These reforms have been a decade in the making and now is the time to press play, not pause.

"Small firms are essential to making these reforms work. Of the nine million expected to be enrolled, up to three and a half million are working for small businesses. Exempting them or delaying their start would put them at risk of a retirement spent in poverty."

To find out more about auto-enrolment visit our Company Pensions page.