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Govt confirms doubling of auto-enrolment timetable to 2015

The Government has confirmed today that it has doubled the timescale to be auto-enrolled into personal accounts from April 2014 to October 2015.

Money Marketing revealed the extension to the deadline earlier this month but the Department for Work and Pensions would not confirm it.

The timescale for implementation of auto-enrolment will now be three years from October 2012 instead of 18 months to give employers and administrators more time to complete the process.

It is also pushing back by a year the deadline for employers to reach the full 3 per cent employer contribution on banded earnings from October 2015 to October 2016.

In the paper released today, the DWP says: “Following detailed consideration of the operational capacity of the delivery partners, we believe it is necessary to stage the reforms including the employer duties, over a 3-year period.

“This strikes the right balance between getting people into saving as quickly as possible and minimising the operational risk associated with the reforms. At its peak, that would still mean around 100,000 employers being brought into the duties in one month breaks.

“The three-year period would include one month breaks in which no employers are staged in, to allow any backlogs or unplanned events to be addressed.”

ABI director of life and savings Maggie Craig warns the delay could undermine the scheme. She says: “Botched implementation of the Pensions Act will put the success of the reforms at risk. It was always understood that some phasing was necessary, but the four-year delay before contributions rise to 3 per cent is unacceptable. It means that no employer will have to pay more than 1 per cent until October 2015 – the rate of saving for people in the scheme will move at the pace of the slowest.”

Standard Life head of pensions policy John Lawson says: “The staging of employers by size will come as a welcome relief for many small businesses.

“The fact that 8 per cent of band earnings does not kick in until 2017 means that savers will not build up decent pension pots until well into the 2020s.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Govt confirms doubling of auto-enrolment timetable to 2015
    If ever there was a wrong way to go about tackling a crisis, then this has to be about as good an example as I can think of. They’re coming at it from completely the wrong angle. Who wants to be coerced into putting money into a retirement savings system that is manifestly overdue for root and branch reform and redesign? What needs to be done is to sort out what we have already so that people won’t need to be coerced. If only the fools could see……

  2. Why won’t they sort the complexity of the benefits sytem first?
    John Lawson of Standard Life says “..savers will not build up a decent pension pot until well into the 2020’s”. If the average wage is around £25k, contributions are based upon banded earnings, so even if someone contributes 8% of the £20k within the NI band for 20 years, they are likely to end up with a Pension of £175 pm (level pension with spouse benefit + £11,182 cash as per FSA website) This will probably be just enough to preclude them from several State benefits that will be available to their colleagues who all opted out. Add on the dumbing down of existing superior schemes and the bureaucratic chaos and await the next Grand Design

  3. Government and Politics
    This has more to do with politics than common sense. Are we not fed up with governments being seen to do the right thing than actually resolving the huge pension shortfall facing the UK in the next 20 years (or earlier). Thoroughly agree with John. You pay peanuts and you get a pension for a monkey. People need to be re assured and feel confident that it is actually worth contributing to a pension. I dont see that currently for Jo public on average earnings, with all the restrictions and abismal annuity rates that come with a pension. Thanks but no thanks, if the government is involved it has to be a bad idea as they always have a hidden agenda. Sorry to sound cynical but they do not have good track record here. They do however have a reputation for meddling in things and breaking them. Look at the the percentage of savers now, look at the percentage of people putting money into pensions now, look at the number of Final Salary Schemes closing due to reporting procedures and margin requirements etc etc.Look at the lack of action with regard to public sector pensions. Perhaps this pot should now be shared with the whole population. I do not relish the thought of a retirement populated with Civil Servants on index linked pensions that they have contributed absolutely nothing to do you?

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