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February 07, 2012

Pensions auto-enrolment delayed until 2017

Business groups have welcomed the Government’s decision to delay the pensions auto-enrolment date for small firms by two years.

Following an announcement by the Department for Work and Pensions, firms with fewer than 30 employees now have until 1 April 2017 to complete their auto-enrolment process for staff, instead of 1 April 2015.

Newly established businesses must enrol their staff by 1 February 2018, while larger firms with 250 or more staff must begin enrolment this October.

Pensions minister Steve Webb said that the revised timetable would make it easier for small firms to comply with the changes. “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,” he said.

The announcement follows the Government’s decision last November to put back the deadline to some point after May 2015, owing to the economic pressures already placed on businesses by the downturn.

Chief pension policy adviser at the Institute of Directors, Malcolm Small, called the Government’s decision “sensible”. “These regulations are onerous, complex and difficult for many firms to get to grips with,” he said.

“Anything that buys businesses more time – especially smaller firms – is therefore a good move,” added Small. “We would also like to see a clear communication programme about auto-enrolment from the Government, because lots of employers are still in the dark about what they have to do, and when they have to do it by.”

According to Phil Orford, chief executive at the Forum of Private Business, the delay would allow small firms to focus on running their business until the economy was in firmer territory. “It will give small business the extra time to plan for and subsequently implement the scheme successfully,” he said.

As a result of the new timeline, the increase in the minimum rate of employer pension contributions from 1 per cent to 2 per cent of qualifying earnings will be delayed from October 1 2016 to October 1 2017. Full employer contributions will then increase to 3 per cent from October 1, 2018.