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Small firms want auto-enrolment delay

More than 9 out of 10 employers who have not yet started automatically enrolling employees into a workplace pension would like to delay until the government has confirmed final details of the upcoming pension reforms.

Employers must start enrolling eligible employees into a workplace pension on a specified date known as their staging date. More than a million businesses with fewer than 60 employees will have their staging dates between October 2014 and 2018.

A survey by the Association of Consulting Actuaries (ACA) found that more than 90% of small and micro-sized businesses want their staging dates delayed until full details of the pension reforms have been confirmed.

The survey found:

  • 62% of firms with more than 10 employees know when their staging date is and 43% have begun budgeting for it
  • 46% of micro businesses (those with 9 or fewer employees) know when it is and 29% have started budgeting
  • 57% of small firms will enrol employees into NEST or another multi-employer scheme; 70% of micro businesses will do the same
  • small businesses expect 10% of employees to opt-out of being auto-enrolled; micro businesses expect a 16-20% opt-out rate.

The poll also found that the majority of businesses were broadly supportive of the government's pension reforms:

  • almost 6 out of 10 supported the reforms while just 1 in 10 were opposed
  • face-to-face is the most popular delivery method for the guaranteed independent guidance being introduced
  • 56% support further reform that targets tax relief for those on lower incomes.

David Fairs, chairman of the ACA, said:

"Yes, it is right that pension provision should be available to employees in even the smallest firms, but with so many pension reforms being squeezed into a short time-frame, it cannot be surprising that smaller employers are calling for a delay in auto-enrolment.

"We believe that there could be some sense in pausing the dates when employers with fewer than 50 employees are due to auto-enrol - namely those due to auto-enrol from 1 June 2015 onwards. This would give all of the political parties the opportunity in the run-up to the General Election to outline what financial measures they are proposing so the scheduled higher minimum pension contributions from October 2018 do not undermine take-up or, worse still, employment levels."

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