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Government may give small firms auto-enrolment extension

The Government is looking at extending the automatic-enrolment phasing-in period for small firms due to concerns about their growth prospects.

Money Marketing understands that policymakers are concerned about the impact of the auto-enrolment reforms on small businesses and are considering making further concessions

These could include introducing a longer phasing-in period and special consideration for specific sectors and where they are in the economic cycle.

Under the current proposals, the biggest employers must enrol staff into a company pension scheme from October 2012. The rules will be extended to SMEs by September 2016.

Minimum contributions will be phased in, with employers paying 1 per cent of qualifying earnings between October 2012 and September 2016.

This will increase to 2 per cent between October 2016 and September 2017 before rising to 3 per cent from October 2017.

Cicero Consulting director Iain Anderson says: “The small business lobby is proving incredibly effective in getting its arguments across on this issue.”

A Federation of Small Businesses spokesman says: “When auto-enrolment comes into force, it will be burdensome on small businesses. Layering administrative burdens and costs on SMEs at a time when the economy is so fragile is counter-productive.”

Legal & General pensions strategy director Adrian Boulding, who co-authored the Making Automatic Enrolment Work review, says: “Looking back, one thing we could have done differently to ease the burden on businesses is look at yearly entry, so employers would only have to check the eligibility of their staff for auto-enrolment on a specific date in the year.”

A DWP spokeswoman says: “We have listened to the concerns of business on automatic-enrolment and that is why the Pensions Bill will ease the burdens on business through the introduction of a waiting period and increasing the earnings threshold.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. What about the financial impact of RDR on small firms !!!

  2. a bit of sense. it would be nice to get a bit more and only start with those people with earnings above 15,000.

  3. Making it up as they go along.

  4. Read the statement from the DWP – “we’ve listened to what you’ve said and we’re going to do nothing more than the bits that we’ve already put in the Pensions Bill, and one of those are just simplifications of rules that were already in place” – small business lobby thinks it’s being successfull in getting it’s meassage across? I think the small business lobby needs to learn how to read government statements…

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