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Auto-enrolment for small firms put back to May 2015

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Auto-enrolment staging dates for small businesses are being put back by thirteen months, the Department for Work and Pensions has confirmed this afternoon.

Businesses with less than 50 employees will now hit their staging dates from May 2015, instead of the current timing of April 2014. The postponement puts auto-enrolment for these firms back beyond the end of the current Parliament.
The DWP says it has taken the move in recognition of the challenges facing small businesses.
The rate of pensions contributions will remain unchanged until all businesses have started automatic enrolment. This measure will benefit all employers.
The postponement will hit around 7m employees of small firms, but the DWP says that half of all workers will still be automatically enrolled before the end of this Parliament.
It says further details will be published in January.
The announcement follows the Beecroft report recommendation earlier this month that auto-enrolment be delayed. The Department for Business has accepted that auto-enrolment for all companies will cost businesses around £3bn.
Minister for pensions Steve Webb says: “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.”
Maggie Craig, director of life and savings at the ABI says: “We do realise that the UK is facing huge economic challenges and that small businesses are up against it. We support the Government’s efforts to alleviate some of this burden by allowing more time for the economy to recover before smaller companies start enrolling their employees into a pension.
“However it will be very important that this is not allowed to slip and slip. We need to keep up the momentum to address the UK’s savings crisis. We need a firm timetable so that employers are clear what is expected of them and the millions of workers in the UK without a pension can start saving for their retirement.”
Fraser Smart, MD of Buck Consultants Europe says: “Moving the goal posts on auto-enrolment at this crucial stage creates a mood of uncertainty and sends mixed signals to small business. It calls into question the Government’s commitment to putting a fair and adequate solution in place that will provide the UK workforce with the security of a sustainable retirement.
“As a nation our pensions contributions are dangerously low and, while pushing back targets may provide some short-term relief, the long-term impact of the Chancellor’s announcement will be felt at retirement, when people will be least able to do anything about it.
“It begs the question, why should employees lose out on pension contributions just because they work for a smaller employer? It’s a very disappointing decision by the Chancellor, and one which compromises the long-term retirement security of the nation.”


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