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Staging date awareness still low in smallest firms
03 November 2014

New research has found that fewer than half of the smallest employers know their staging date – the date when they must start auto-enrolling eligible workers into a qualifying workplace pension scheme.

A survey by the Association of Consulting Actuaries (ACA) found that only 46 per cent of employers with nine or fewer employees have identified their staging date and only 29 per cent have started budgeting for auto-enrolment costs. The picture is more positive among businesses with ten or more employees, where 62 per cent of employers are clear about their staging date.

The survey, carried out in 414 firms with 249 or fewer employees, also found that more than nine in ten employers who have yet to reach their staging date want the process delayed until government reforms introducing greater pension flexibility have been completed.

The ACA said that more than a million businesses with 60 or fewer employees would need to start auto-enrolling up to eight million employees between October 2014 and 2018, the majority in a two-year window between June 2015-2017.

By 2018, minimum pension contributions must be the equivalent of eight per cent of an employee’s earnings in a specified band, with earnings of £10,000 triggering automatic auto-enrolment. Employers will be required to contribute at least three per cent, with four per cent from the employee and one per cent coming via tax relief.

ACA chair David Fairs said on 23 October: “It is right that pension provision should be available to employees in even the smallest firms, but with so many pension reforms being squeezed into a short time frame, it cannot be surprising that smaller employers are calling for a delay in auto-enrolment.

“It also has to be remembered that…most small employers will have to find three per cent of band earnings and their employees four per cent within two years of auto-enrolling – at a time when average pay increases are likely to be well below these figures.

“We believe there could be some sense in pausing the dates when employers with fewer than 50 employees are due to auto-enrol – namely those due to auto-enrol from 1 June 2015 onwards.

“This would give all the political parties the opportunity in the run-up to the general election to outline what financial measures they are proposing so the scheduled higher minimum pension contributions from October 2018 do not undermine take-up or, worse still, employment levels.”

Link: Auto-enrolment information

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