Small businesses have been given more time before they need to enrol their staff into a workplace pension thanks to a recent government announcement.
The Government has pushed the auto enrolment pension deadline back one year to help small companies save money affecting nearly four million workers in the UK.
For companies employing 50 or less employees the starting deadline for automatic enrolment into workplace pension schemes has been moved from April 2014 to May 2015. The enrolment process for large employers is still due to begin in October 2012.
All employers would still have to comply eventually with the automatic enrolment programme but the Government is trying to soften the financial blow for smaller businesses allowing them more breathing space to plan and save for these reforms.
It is estimated that these pension reforms will cost employers over £4.5billion per year. All firms will eventually have to contribute at least 3% of their employees’ salary, with the employee adding at least 4%.
Tax relief would take the total contribution to a minimum of 8% of pay.
Although many firms will have an extra year to plan we would still recommend you look now at how these changes will affect your cash flow and how you will manage and administer these pensions.