New businesses granted auto-enrolment reprieve

New businesses granted auto-enrolment reprieve

New businesses will be offered a reprieve of up to three months before they have to enroll their employees in a workplace pension, the government has confirmed.

While this reprieve is already in place for existing companies when they reach their staging date, it does not exist for new businesses entering the market for the first time.

The rule change is targeted specifically at employers whose employee headcount means they are already bound by auto-enrolment rules.

The government stated that, under current rules, such employers would have "near instantaneous AE duties apply to them".

The new rules, which will come into force in April, will ease this requirement, giving business up to three months to enroll their employees in a pension.

The government said such employers were "likely to benefit most from the ability to have more time to deal with the official administrative requirements around automatically enrolling a new worker".

The new rules will also change the auto-enrolment "duties trigger" for new businesses, which specifies the date at which a business's duty to comply with auto-enrolment begins. 

Under the new rules, new businesses will have to comply with auto-enrolment legislation from the date the first worker begins to be employed by the business.

Previously, the AE duties trigger date was the day on which PAYE income was first payable to any worker.

This meant the employee could not be automatically enrolled into a pension scheme until up to a month after starting work.

The government stated that this change would make it easier for The Pensions Regulator to do its job.

Adrian Boulding, director of policy at Now: Pensions, said: “Today the government has issued a rather dry notice that tidies up some auto enrolment legislation, including confirmation that new employers setting up in 2017 will be able to postpone new workers joining the pension scheme for three months, as is current standard practice.

"However, Now: Pensions believes that this opens a question about postponement that we will be raising as part of the Pensions Minister's Advisory Committee for the 2017 auto-enrolment review.

"We really must question whether, in today's labour market, where many workers choose to progress their careers by moving from one employer to another, it is right that they should be denied three months pension each time they move jobs.

"Now: Pensions suggests that the whole system would be both simpler and fairer to individuals, if pension contributions always started on the first day of employment.”