I wouldn’t like to be Steve Webb this afternoon. Having protested for the past few weeks that the DWP‘s auto-enrolment timeline was carved in stone, we learn today that employers with 3000 or less employees (for details follow this link!) will have another year or so to prepare for the business of paying money into their staff’s pensions through auto-enrolment.
This may appease the “anti-red-tape-brigade” but it does nothing for Steve Webb or his department’s credibility. Organisations like ours who have been planning our communications strategy to smaller clients have now to re-communicate and re-timetable. I don’t suspect that many micro-employers have started pensions yet in readiness for their auto-enrolment staging but there will be many who might otherwise have been setting up plans who will be getting a very negative message from this delay.
The message that the Government are sending out is “pensions are very difficult and we don’t think you should be rushing into things”. This despite NEST being open for new business and NOW, the People’s Pension and many other multi-employer and single employer DC plans rearing to go.
Those with long-memories will remember how the bold promise of stakeholder pensions was blunted by cynical sabotage in the months leading up to its implementation. The result was that stakeholder pensions brought down charges for the well off and did nothing for those in low-paid employment (the people they were designed to help).
Auto-Enrolment is now looking like a means for large employers to justify closing the remaining DB plans to future accrual, watering down the DC contribution rate for existing members so as to include the staff who never got pensions. Meanwhile, the millions of people who do not have access to a workplace savings scheme (because they work for small employers) will continue to have to fend for themselves. NEST is looking more of a white elephant than ever, it’s proud boast to accommodate the smallest employers looks increasingly redundant.
Here’s the Government Press Release in full; but be aware it doesn’t tell the full story- since the announcement we have had confirmed by the DWP that since full contributions for early stagers do not commence till staging has ended, every employee being auto-enrolled will potentially be affected.
28 November 2011 – Government announces changes for small business
to the automatic enrolment timetable
The Government today confirmed that automatic enrolment will begin on time in autumn 2012 and all employers will remain in scope.
Small businesses will be given additional time to prepare for the implementation of automatic enrolment. The timetable will be adjusted so that no small employers are affected by the reforms before the end of this Parliament.
The rate of pensions contributions will remain unchanged until all businesses have started automatic enrolment. This measure will benefit all employers.
Minister for Pensions Steve Webb said:
“Our society and economy needs to be based on a foundation of saving, not debt. Automatic enrolment will help millions save, and to not act will leave people poorer in retirement. That is why I am confirming today that automatic enrolment will start on time and all employers will be part of it.
“We recognise that small businesses are operating in tough economic times so we are softening the timetable for implementation to give them some additional breathing space. This is a sensible step that ensures long term pension issues are addressed while meeting the short and medium term needs of small business.
“We are committed to ensuring the employees of these small businesses get the chance to save and that is why no one will miss out.”
Under the revised timeline, small business would begin automatically enrolling their staff in May 2015, instead of the current timing of April 2014. Half of all workers will still be automatically enrolled before the end of this Parliament.
We are told this is a postponement not a cancellation but the damage has been done. As those of us who have had to cajole people and companies into sorting out their pensions know, give people the opportunity to put off a decision and they will do so, give them the opportunity to do it twice and it becomes a habit. We have allowed the timeline for the implementation of auto-enrolment to slip not once, not twice but three times now.
Is my memory defective or did Steve Webb not say at the launch of NEST
“the timetable for auto-enrolment will not change so long as I am the Minister”