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Plan for waiting period on auto-enrol

The Government is set to allow employers to operate a three-month waiting period when auto-enrolling staff into their pension in exchange for making higher contributions.

Money Marketing understands that the measures are likely to form part of draft regulations on pension reforms, due to be published shortly.

It is thought that firms choosing to operate the waiting period will have to increase their contribution to employees’ pensions to 6 per cent of banded earnings – double the minimum 3 per cent requirement.

The regulations, which were expected at the start of the month, will build on a provision in the Pensions Act which suggests auto-enrolment date could be after the worker’s first day.

Aegon head of pensions development Rachel Vahey says: “This would be particularly helpful for companies with high levels of staff turnover because, while it would mean a significantly bigger contribution bill, they will probably minimise their admin and reduce costs.”

A DWP spokesman says: “In order to encourage employers who voluntarily make higher contributions to maintain their generous provision, there is a provision in the Pensions Act to allow them to postpone automatic enrolment by a short per-iod. We will be bringing forward draft regulations setting out the detail of how this will work.”

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