Govt to delay pension reform for small firms

The government will give small firms extra time to prepare for auto-enrolment reforms, the Department for Work and Pensions (DWP) has confirmed.

In a widely anticipated move, the DWP has announced that firms with fewer than 50 employees will not have to begin automatically enrolling staff into workplace pensions until 2015.

This is one year later than under the previous timetable.

All firms with between 51 and 3,000 employees, which are due to begin auto-enroling after July 2013, will also have their staging dates reviewed. Any changes here will be confirmed in January.

Pensions minister Steve Webb said no businesses will be exempt from reform, and after January's review, there will be no further changes to the timetable.

Under the reforms, employers will have to enrol all workers aged over 22 earning £7,475 or more in a compliant pension scheme, and contribute 1% of earnings to the schemes, rising to 3% by 2017.

The Department for Business, Innovation and Skills has said the reforms are likely to cost UK businesses around £3bn.

The announcement comes before chancellor George Osborne's Autumn Statement tomorrow, in which other support for small businesses including help securing lending is expected.

Labour has previously warned against any changes to the auto-enrolment timetable.

Former chancellor Alistair Darling said in October a 12-month delay to reform would bring the whole package to a halt.

Further details on the timetable will be published in January.