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Auto-enrolment delay could damage SMEs

Delaying the staging date for small businesses to implement pension auto-enrolment could do more harm than good.

These are the thoughts of law firm Ward Hadaway, which claims that delays could cause difficulty planning, stunt growth and damage pension providers.

The Government claims that the delay, which will mean that small businesses will not be affected by the reforms until the end of this parliament, will give them the breathing space that they need whilst operating in a tough economic climate.

Auto-enrolment will still be phased in from October 2012, starting with the largest employers first, meaning that half of all workers will be enrolled before April 2014 as previously planned.

Commenting, Tristan Mander, associate and head of pensions at Ward Hadaway said: “Whilst this delay may be welcome for SMEs who already have their hands full dealing with the challenging trading conditions, it will add further uncertainty to an already uncertain economic climate.

“Small businesses need to be able to plan for the future with some degree of certainty. The fact that they now do not know when such potentially huge calls on their cash flow will occur makes planning that bit more difficult.”

The reforms will require all employers to automatically enrol qualifying employees into a pension scheme, and make contributions.

You can find out more about the pension reforms here.