Small firms get two-year pensions reprieve

The dates from which smaller companies will start having to automatically sign employees up for company pension schemes has moved again.

In a ministerial statement on 25 January, Department for Work and Pensions minister Steve Webb announced that while the automatic enrolment legislation will start as planned for employers with more than 250 employees will start as planned from October this year, those with fewer employees will be assigned new start dates according to a timetable published on the DWP website.

Organisations with between 50 and 249 employes will start auto-enrolling employees between 1 April 2014 and 1 April 2015 - a year later than planned - and small employers with fewer than 50 employees will not have to do so until two years later, from 1 April 2017.

Diana Bruce of the CIPP added that all employers with an existing staging date of on or before 1st February 2014 are unaffected, so for those employers with more than 250 employees, their staging dates have not changed.  "However the level of pension contributions will be phased in further six years and not five to help employers and individuals adjust," she said. "Under the revised timetable full minimum contributions from both employers and employees (combined total 8%) will not have to be paid until 1 October 2018, whereas under the previous timetable this would have been a year earlier so it isn't just small employers who are benefiting financially from the delay." 

The latest change, which follows a previous timetable shift in November, suggests that the National Employment Savings Trust (NEST) project Labour introduced towards the end of its period in office to beef up pensions provision is becoming a political football that the Coalition government wants to kick into the next Parliament.

But with the wheels turning for larger employers, HMRC recently issued a note to tax advisers about the changes to help them advise employers on how to comply with the new duties.

Apart from the latest date revisions, Diana Bruce from the Chartered Institute of Payroll Professionals explained the requirements in a recent article for AccountingWEB.