Government confirms pension auto-enrolment starting dates

Out-Law News | 26 Jan 2012 | 9:21 am | 2 min. read

Companies with more than 250 employees will have to automatically enrol their staff into a workplace pension scheme from October as originally planned, the Government has said.

The Government has issued a revised timetable for the application of the changes to all employers.

Medium-sized employers, including companies with between 50 and 249 employees, have been allocated new dates between 1 April 2014 and 1 April 2015, while companies with fewer than 50 employees could see their staging dates pushed back as far as April 2017.

Pensions Minister Steve Webb said that the Government had done everything it could to ease the burden the reforms would have on businesses. In November, the Department for Work and Pensions (DWP) announced that small businesses would be given an additional year to prepare for the changes to help them out in the current "tough economic environment".

"Automatic enrolment will begin on time this October taking up to 10 million people into pension saving, many for the first time ever, and all employers will be part of it. Employers of all sizes now know the date they need to start enrolling their staff," he said.

Pensions law expert Simon Tyler with Pinsent Masons, the law firm behind, welcomed the Government's clarification as did Joanne Segars of industry body the National Association of Pension Funds.

"It was difficult to prepare while the dates were still up in the air for many employers," said Tyler. "Now that the dates have been published, all employers and providers can put a plan of action in place. They should leave themselves plenty of time to get their auto-enrolment systems up and running."

Segars said that the Government needed to "stick to the new timetable" and avoid further last minute changes. "There have been too many delays already," she said.

However, unions said it was "disappointing" that employers would not have to pay their full contribution rates of 3% of employee salaries until 1 October 2018 – thirteen years after the Pensions Commission initially recommended auto-enrolment.

"Everyone agrees that we face a pensions crisis, with two out of three private sector workers not in any kind of workplace pension. Yet successive governments have delayed the introduction of auto-enrolment and the new system will not now be fully in place until three years after the next general election," said the TUC's Brendan Barber.

The Government said that it would phase in the amount that would have to be contributed by both employers and individuals to "help [them] adjust". More information would be published shortly, it said.

From October, employers will have to start auto-enrolling their workers into a pension scheme which meets minimum requirements or the National Employment Savings Trust (NEST). Employers will be required to automatically enrol 'eligible jobholders' aged between 22 and the State Pension age who are earning more than £7,475 a year.

The largest companies will need to begin enrolling their staff first, followed by medium and then smaller companies. All existing companies will have to have enrolled their staff by April 2017, while new employers will have until February 2018.

The Government said that the new timetable meant that 55% of workers would be automatically enrolled onto a pension scheme before the next general election, compared to 65% under the previous arrangements.

An £11 million publicity campaign aimed at increasing awareness of the reforms among workers started this week.

Tyler previously told that the delayed timetable may actually encourage saving.

"The delay may also be good in the long run for pension saving," he said in November. "If auto-enrolment is to be a success, it is crucial that workers have the confidence to save. Auto-enrolling workers at a time when many may have little spare cash might have led to increased opt-outs and put some workers off pension saving for good. The Government's hope is that 2015 will be a more suitable time than 2014."

Editor's note 01/02/12: The data relating to the number of workers predicted to be automatically enrolled before the next general election were changed in this story to reflect Government revisions of its figures.

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