DWP suggests 14-day auto-enrolment deadline

Employees will need to be provided with basic pension scheme information within seven days of starting work from 2012, the Government says.

The Department for Work and Pensions (DWP) today outlined details of the automatic enrolment process for employers, setting tight deadlines for pension scheme membership.

From 2012, all employees must be given basic information on the pension scheme they will be enrolled in within a week of starting a new role. The employer will need to ensure they become a member of a pension scheme within a further seven days.

Following the first two weeks of employment, workers will then have a further 30 days to opt-out of the scheme.

However, Andrew Tully, senior pensions policy manager at Standard Life, believes employees who wish to opt-out of their company pension scheme may face additional costs as a result of the 7/7/30 process.

"'These proposals will add costs for employees," he says. "It will take time to refund contributions, possibly leaving people out of pocket for a month or more. The 7/7/30 process will increase administration and costs for employers."

However, Tully says employers using a private pension scheme with total contributions of 11% of band earnings, with employer contributions of at least 6%, could defer the auto-enrolment process for 90 days, reducing the administrative and cost burden.

"To avoid the hassle and cost involved, employers may want to ensure they can operate a three month waiting period, avoiding the process for staff who leave quickly," he adds.

Full details of the DWP's regulation consultation are available at http://www.dwp.gov.uk/consultations/2009/pensions-auto-enrol-regs2009.pdf.

Contact: John Bakie, Tel: 020 7484 9805, e-mail: John.Bakie@incisivemedia.com