DWP Delays Auto Enrolment for Small Employers

28 November 2011

The Department for Work and Pensions (DWP) has today announced that Auto Enrolment staging dates and contribution increases will be delayed or changed for businesses with less than 3000 employees.

Firms with 50 or fewer workers will see their staging dates delayed until after the next election whilst those with between 50 and 3000 will see a slight delay.  There will also be a delay to the increase in employer contributions from 1% to 2% from the current date of October 2016.  The exact timetable following the changes will be unveiled in January 2012. The context and rationale are summed up here by Steve Webb, Pensions Minister:

"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.”

Points to note / commentary:

This deferment pushes implementation for small employers beyond the end of this Parliament (if it runs full term) creating potential for further changes, back or forward.

Pensions are good! They are a highly tax efficient employee benefit that really creates return on investment. Even if your Staging Date has been put back, there are good reasons to start a pension plan for your employees sooner rather than later. (Sorry, I just couldn’t resist that! I do appreciate this represents a welcome change for many small businesses).

Given the scale of challenge that auto enrolment poses to The Pensions Regulator, as well as employers, cynics might suggest this change is not mere political point scoring but a cover up for the expected strain on public resources.

Steve Johnstone
Director and Head of Auto Enrolment Services
Creative Benefits