Small firms have been given an extra year to prepare for the auto enrolment of their employees into a qualifying pension scheme. The Department for Work and Pensions (DWP) has announced a revised timetable so that small firms with fewer than 50 employees will not begin the process until mid 2015 instead of April 2014 as originally intended.

Larger employers will still commence their auto enrolment processes from the original start date in October 2012, although no business or employee will be required to pay a full contribution until October 2018.

Given the government’s own estimates that suggest the cost to businesses of supporting auto enrolment will likely be £4.5billion a year, DWP are looking at a phased approach for contributions to allow business’ and their workers to adjust. The contribution rate will be phased in, increasing over three phases to the ultimate level of 8% of qualifying earnings (of which 3% is the cost to the employer).

 

Employer size (PAYE scheme size) or other description	Auto enrolment duty date
	From	To
250 or more members	1 October 2012	1 February 2014
50 to 249 members	1 April 2014	1 April 2015
Test tranche for less than 30 members	1 June 2015	30 June 2015
30 to 49 members	1 August 2015	1 October 2015
Less than 30 members	1 January 2016	1 April 2017
Employers without PAYE schemes	1 April 2017	– – –

 

The recent DWP announcement is an acknowledgement of the tough economic conditions currently being faced and small firms will welcome this news and the extra time to prepare.

The minister for pensions Steve Webb said: ‘We have done all we can to ease any burden on business the reforms will bring, and employers of all sizes now know the date they need to start enrolling their staff.’