Delays to pension auto-enrolment for smaller firms welcomed by REC,

Delays to pension auto-enrolment for smaller firms welcomed by REC, but wider market distortions must be avoided

An announcement by Pensions Minister Steve Webb, that pension auto-enrolment will be delayed for smaller firms, was welcomed today by the REC.

The Minister announced that, although the scheme will go ahead from next year as planned, companies with fewer than 50 employees will not have to begin enrolling their staff until May 2015, a year later than previously planned.

He also stated that “Everybody who is due to be enrolled this side of July 2013 will see no change in their dates.” This suggests that companies with fewer than 3,000 staff, due to be phased-in after July 2013, could also see a postponement.

A fully revised timetable will be published by the Department of Work and Pensions in the New Year.

Recruitment agencies will be responsible for ensuring any PAYE temps on their books are auto-enrolled, meaning the 3,000 worker limit for any delay could have a significant impact on the market.

Responding to the announcement, Gillian Econopouly, the REC's Head of Policy,  commented:

"The Government should be commended for their decision to delay the pension auto-enrolment scheme for smaller companies, given the current imperatives on job creation.

'We urge the Government to take a similar second look at the impact on the recruitment industry, however, to ensure the staged timeline does not create unintended market distortion in our industry.

‘In particular, if the 3,000-worker limit is used to determine whether a firm is required to auto-enrol much earlier than its competitors, this will give a significant unfair advantage to certain recruitment agencies, potentially creating a major distortion.

“The flexible labour market is a vital safeguard against large-scale unemployment, which will be all the more important in light of downgraded economic forecasts. The government must make sure these well-intentioned reforms do not damage this safeguard.”

The REC will be undertaking a comprehensive programme of guidance and support for members on auto-enrolment throughout 2012, as well as working closely with DWP, the Pensions Regulator and NEST to ensure the recruitment industry’s view is heard as the system is finalised.