The Government is pushing ahead with plans to force small firms to auto-enrol all employees into a pension scheme, but only those employees earning more than £7,500 will be included.
Announcing the findings of a review into auto-enrolment, the Department for Work and Pensions (DWP) confirmed that every UK company will have to offer a pension scheme from 2012. Those employers not offering their own scheme will be compelled to use the new National Employment Savings Trust (Nest).
The decision comes despite warnings from small business lobby groups that those firms employing fewer than 10 staff would be unduly burdened by any auto-enrolment scheme.
The DWP has, however, made some concessions to employers, with firms to be given 12 weeks’ grace before staff are automatically enrolled, to ease the burden on those employing large numbers of temporary workers.
In addition, Nest will not force anyone earning below the £7,500 PAYE threshold to enrol but will allow those on a percentage earnings band between £5,000 and £7,500 to opt in. The 2008 Pensions Act had suggested auto-enrolling all staff earning £5,035 or more.
Many thanks to Daniel Thomas of Personnel Today for this article.
