UK to delay auto-enrolment for SMEs
UK - The introduction of auto-enrolment will be delayed for small and medium enterprises (SMEs), the UK government announced today.
Pensions minister Steve Webb made the announcement while addressing parliament, with the Department for Work & Pensions saying that small businesses would be given "additional time to prepare".
It comes after months of speculation that the government was considering a delay due to the current economic climate.
However, the National Association of Pension Funds (NAPF) had previously warned that any change to previously agreed staging dates would be "highly damaging", while former Labour chancellor Alistair Darling warned that any delay would be a "big mistake", wasting the cross-party consensus built around the Turner report.
Speaking at the NAPF conference earlier this year, he said: "Frankly, auto-enrolment is not going to make the difference to our economy recovering or not. We've got far, far bigger problems than that."
The NAPF said it was "disappointed" by the delay, with chief executive Joanne Segars - referencing chancellor George Osborne's refusal to consider anything but austerity as a way out of the current financial crisis - noting: "When it comes to pensions, the government should have stuck to plan A. These reforms have been a decade in the making, and now is the time to press play, not pause."
Segars said that it could undermine confindence in the system, with smaller companies now copmpeting against larger ones who still needed to auto-enrol employees.
A revised timeline, due to be published in the new year, would reassess the current staging dates. At present, the timeline sees large companies, with more than 120,000, affected by auto-enrolment from autumn next year, staggering the introduction depending on a company's size over the following four years.
Webb said that auto-enrolment would help "millions" save for retirement and was keen to stress that it would still launch on time for large employers.
He added: "We recognise that small businesses are operating in tough economic times so we are softening the timetable for implementation to give them some additional breathing space.
"This is a sensible step that ensures long term pension issues are addressed while meeting the short and medium term needs of small business."
SMEs will now face auto-enrolment from May 2015, meaning the staging date will come after the next national election. The DWP stressed that half of all workers would nonetheless be enrolled by the end of the current parliamentary term.