Pensions - Articles - Andy Cheseldine comments on delays to auto-enrolment

 "The Government has announced that it will defer auto-enrolment for 'small employers' - those with less than 50 employees.

 
 According to BIS (Department for Business, Innovation and Skills) there are 1,141,950 private enterprise businesses employing fewer than 50 people, with a total of 6,503,000 employees.

 
 Although only about 50% of the UK working population are active members of pension schemes, for smaller employers this proportion is much lower - 12% for employers with fewer than 13 employees and 28% for those with fewer than 100. It follows that there may be about 5 million of these workers who will be affected by the deferral.

 
 As the minimum contribution rates are to be phased in and will currently not rise above a 1% employer match until October 2016, the deferral is unlikely to mean much in the way of cash savings to individual employers or employees.

 
 It appears that DWP also intends to adjust the timetable for employers of less than 3,000 employees (although this is only likely to be by months for the larger employers). We await details of the revised timetable from DWP as this change to staging dates significantly reduces the clarity required by employers of between 50 and 2,999 employees - who between them employ millions more workers.

 
 This may also cause something of a strain for pension providers, including NEST, who will face increased administration burden as a result of more employers being shoehorned into the later staging dates. At the same time it will reduce the expected contribution flow to providers which will impact their business models and, therefore, their pricing structures.

 
 In some ways, this is most interesting as a comment on how the Government expects the economic recovery to have progressed (or, rather, not) by 2015."