The Treasury is putting pressure on the Department for Work and Pensions to exempt small firms from auto-enrolment, according to Shadow pensions minister Gregg McClymont.
Writing in this week’s Money Marketing, McClymont says a controversial report for Number 10 by Dawn Capital chairman and Conservative Party donor Adrian Beecroft, which identifies factors holding back small business growth, proposes removing small firms from auto-enrolment.
McClymont claims the Treasury is pushing for the exemption but the DWP is resisting, although most Government statements allow for some leeway on the issue.
He says: “The word ’currently’ is important. It was used by Work and Pensions spokesman Lord Freud in the final reading of the Pensions Bill to explain the Government’s plans on whether small firms will still be required to enrol their employees.
“Apparently, Government ’currently’ intends this to be the case. In other words, this battle is one which the DWP is not sure it is going to win and it is preserving wriggle room.”
McClymont says the expected costs of auto-enrolment for small businesses are manageable and attacks the Treasury for “pandering to special interests”.
Under the Pensions Act 2011, auto-enrolment will begin in October 2012 with the biggest firms. All firms will be required to enrol employees into a pension by 2016, although employees will be able to opt out.
The DWP and the Treasury declined to comment.
Clarke Robinson & Co managing director Steven Robinson says: “Auto-enrolment will come as an unwelcome further expense for many small businesses and could push some firms over the edge.”
See Retirement Planning supplement