Latest delay scarcely made the news

Reforms designed to get more people saving for retirement have been pushed back so many times that the latest delay scarcely made the news. It will now be October 2018 before minimum employer contributions to workplace pensions are fully phased in. Previously, this was supposed to happen by October 2017 – and before that by 2016, and before that by 2015.

Contributions less affordable
The government says it is taking things more slowly because economic conditions have made contributions less affordable. Nonetheless, the Department for Work and Pensions (DWP) insists it will adhere to the latest timetable regardless of whether the economy improves.

Employer obligations 
Under the new laws, employees will be automatically enrolled into a pension scheme with employer contributions if they are aged between 22 and the state pension age, earn at least £8,105* a year and are not already in a scheme that meets minimum standards. Once enrolled, employees can opt out. But saving in a pension will be the new default setting for anyone who does not express a choice.

Eventually, the automatic level of contributions must be at least 8 per cent of the individual’s ‘qualifying earnings’. This includes 3 per cent that must come from the employer. Qualifying earnings also include payments like overtime and commission, not just salary.

Definitions of pay
Employers can set higher contribution rates if they prefer. They will also have the option of basing contributions on more straightforward definitions of pay, which would usually increase the amount due.

If you are not already in a workplace pension scheme, when you will be enrolled depends on how many people are in your employer’s Pay-As-You-Earn tax arrangement. The automatic enrolment regime applies to the very largest employers from October 2012.

Smaller employers
Progressively smaller employers will then be brought on board month by month until February 2014, when all employers with 250 or more staff will be within scope. Firms with 250 to 2,999 people on the payroll will not now get extra breathing space, as had been hinted in November.

Employers with between 50 and 249 staff will have compliance dates ranging from April 2014 to April 2015.

For firms with fewer than 50 employees, these deadlines fall between June 2015 and April 2017, unless whoever wins the intervening general election offers them a further reprieve.

Any employer setting up business between 1 April 2012 and 30 September 2017 will have auto enrolment dates between 1 May 2017 and 1 February 2018.