Delays to the introduction of auto-enrolment will see the scheme fully implemented three years later than originally planned.
Pensions minister Steve Webb revealed the revised implementation dates last week in a written ministerial statement.
Under the new staging dates, employers with more than 250 staff will see no change and will still have to enrol their employees between October 1, 2012 and February 1, 2014.
Firms with between 50 and 249 employees will be assigned new auto-enrolment dates between April 1, 2014 and April 1, 2015. Firms with fewer than 50 employees will see their staging dates pushed back to between June 1, 2015 and April 1, 2017.
The increase in the minimum rate of employer pension contributions from 1 per cent to 2 per cent of banded earnings will be delayed from October 1, 2016 to October 1, 2017, increasing to 3 per cent from October 1, 2018.
The Department for Work and Pensions says it expects to publish a consultation on the details of the changes “shortly”.
The Turner Commission wanted everyone enrolled with the minimum contribution level of 8 per cent by 2015. The last published timetable would have seen that happen by October 2017, but the new schedule will see the roll-out completed in October 2018.
During a work and pensions select committee evidence session last week, committee chair and Labour MP Anne Begg asked Webb if there would be any more delays. He said: “This is it. This is what will happen.”
The delay was introduced to ease the burden on small businesses that are already feeling the pinch during difficult economic times.
Federation of Small Businesses spokeswoman Sara Lee says: “Although we are pleased small firms have more time to prepare, we still believe the Government should review the scheme for small firms to reduce the administrative burden and to do a full impact assessment.”
Standard Life head of workplace strategy Jamie Jenkins says: “Altering both timescales allows more time for the economy to start to recover and for smaller companies to be in a better position to introduce auto-enrolment. This will be vital to its success.”
TUC general secretary Brendan Barber says: “It does not just hit the staff of small employers, even workers auto-enrolled this year must now wait until the end of the staging process before they get their full contribution.”