Contractors working through an umbrella company may be interested to learn that small firms have been given an extra year to comply with pensions auto-enrolment.
The concession applies to companies with fewer than 50 employees and could affect almost four million workers. Automatic enrolment for these companies is now May 2015 instead of April 2014. Large employers will still be required to start the enrolment process next October.
Steve Webb, the pensions minister, said the delay was sensible. Small businesses are being given breathing space due to the current tough economic conditions. However, the government is committed to making sure all employees get the opportunity to save for their retirement and all employers will eventually have to comply with automatic enrolment.
The news was welcomed by the British Chamber of Commerce. The BCC’s director general, John Longworth, said auto-enrolment will be very costly but there is now a window of opportunity for the government to cut back these costs.
Brendan Barber, the general secretary of the TUC, criticised the decision saying he was extremely disappointed that employees in small businesses would have to wait longer before employers have to make a contribution towards their pensions.
Joanne Segars, the chief executive of the National Association of Pension Funds also expressed her disappointment at the news. She pointed out that the majority of small businesses do not currently provide pension provisions for their employees and they must be included in the scheme if it is going to work.
According to the DWP, between five and nine million employees will have to join a pensions scheme under the new regulations and 44% of them will be affected by the one year delay.
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