Since pension auto enrolment was first implemented in the UK in October 2012 as a government initiative to ensure workers have sufficient pension savings for their retirement,the process has been gradually rolled out and s now affecting millions of small businesses. So having been in place for quite a few years now the government is seeking to make changes to pension auto enrolment.
Whilst large and medium sized companies in the UK have been required to comply with due process otherwise are facing huge fines, the government has become increasingly concerned about the impact of pension auto enrolment on small businesses with their lack of the resources afforded to bigger companies.
The government has now pushed back the dates for increasing contributions to April 2018 and 2019 in an effort to stave off a potentially looming crisis of small businesses and pension providers being able to cope. There has been media coverage about concerns of NEST, the only workplace pension without fees being able to manage as probably the main pension provider small businesses will look to due to its affordability. In the next few years millions of small businesses need to comply.
The qualifying earnings band for auto enrolment minimum contributions will remain at £10,000 in any pay period from April 2016. The qualifying earnings band for 2016-17 will be £5,824 and £43,000 per annum.
The DWP is aiming to simply auto enrolment with some minor changes from April 2016. There will be no need to auto enrol/re enrol company directors and members of limited liability partnerships, a simplified method for an employer bringing forward its staging date and a simplified time scale for employers to notify the pension regulator that they maintain an auto enrolment pension scheme. Consultation on these changes closes in February 2016.
One thing is for sure, as with all government legislation, these will not be the last changes to be announced by the government about pension auto enrolment.