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.”