Every UK company to offer pensions under new rules

All UK companies will have to offer their staff a pension from 2012, the Government announced today.

The new rules, which will lead to up to 8 million people saving into a pension for the first time, will apply to every firm, regardless of how many workers it employs.

But companies will be able to wait for three months before staff are enrolled into a pension scheme, to reduce costs for firms that employ large numbers of temporary workers.

The amount people have to be earning before they are automatically enrolled has also been increased from £5,035 under the previous government's proposals to £7,475 - in line with the level at which income tax is paid.

Other measures to help companies manage the changes include simplifying the process for firms to show that their pension schemes meet the minimum standards required and further measures to reduce the red tape surrounding pension schemes.

The previous government set out plans for all workers to be automatically enrolled into a company pension scheme from October 2012, although they will retain the right to opt out.

Individuals will have to contribute 4% of their pay to the schemes, with companies paying in 3% and the Government topping this up with 1%.

Today's announcement follows an independent review on auto-enrolment, which was launched by the new Government in June.

It had considered exempting firms that employ four or fewer people from the new requirements, but has decided that the rules will apply to all companies.

Companies that do not offer their own pension scheme will be able to enrol their workers into the National Employment Savings Trust (Nest), a low-cost scheme set up by the Government.

Pensions Minister Steve Webb said: "Our reforms will ensure that millions of people will start to save for their retirement, many for the first time.

"I welcome the sensible and balanced proposals from the independent review team, which will help ensure automatic enrolment works."

But critics of the scheme have warned that it could hit the competitiveness of small businesses, while there are also fears that it will lead to a "levelling down" of company pension schemes in line with the minimum contribution levels required.

Auto-enrolment will be gradually introduced between October 2012 and September 2016, starting with large employers, followed by medium ones and finally small businesses and companies set up after April 2012, although firms can bring it in sooner if they wish.

Contribution levels will also be built up gradually, and will initially be set at a minimum of 2%, of which 1% will come from the employer, rising to a total of 5% by September 2017, 2% of which will be paid by companies, and increasing to the full 8% by October of that year.

Staff who want to join their company scheme before the three-month waiting period is up will be able to do so.

The British Chambers of Commerce welcomed the changes announced today.

Dr Adam Marshall, director of policy at the BCC, said: "Businesses will be relieved to hear that the Government has decided to simplify and streamline the 2012 pension reforms - which represent an enormous change to private pension provision.

"Thanks to the 12-week exemption, companies with a high turnover of staff or a large number of seasonal workers will not have to spend a lot of time and money enrolling employees into pensions that they do not intend to continue."

Maggie Craig, acting director general of the Association of British Insurers, said: "This is good news for millions of people.

"The most important outcome of today's review is that the Government will press on with the 2012 pension reforms which will see more people saving for their retirement.

"We think it is right to raise the income threshold someone has to earn before being automatically enrolled, although we would have preferred a higher level of £10,000 to make sure more people clearly benefit from saving."













Business group the CBI welcomed the changes, which it said would make auto-enrolment easier for companies, while still meeting all of the original aims.

John Cridland, deputy director general of the CBI, said: "The most important thing is that all eligible employees will be included. This will mean that the reform achieves its aim of boosting pension saving for all.



"The Government has rightly chosen to simplify the rules for all employers, rather than carve some out and leave others to cope with a high regulatory burden.



"It is also right that auto-enrolment will kick in three months after someone has started a job. This will avoid people on short-term assignments, who want to maximise their income, being auto-enrolled."



Joanne Segars, chief executive of the National Association of Pension Funds (NAPF), said: "The Government has listened to most of the NAPF's recommendations by adopting a common-sense approach that will widen pension provision, whilst still keeping existing good schemes open.



"It is a relief that all employers will be brought into the 2012 programme, and that smaller outfits will not be exempt. The whole point of this reform is that pensions reach all workers, including those in small firms."



But the Federation of Small Businesses said it was "extremely disappointed" that the Government was not exempting micro firms from the rules.



It warned that the cost and time spent on administrative work would damage companies employing 10 people or less.



Mike Cherry, policy chairman of the Federation of Small Businesses, said: "While the FSB welcomes initiatives to help people save for their future, the FSB is severely disappointed the Government has not listened to the needs of the UK's micro firms and has not made them exempt from automatic enrolment into pensions, which will cost employers in time and money."



TUC General Secretary Brendan Barber said: "This review could have ripped the heart out of the hard-won consensus to implement Lord Turner's Pensions Commission.



"It is good news that it has not, but there are still some backward steps in its recommendations and the Government's response.



"We are concerned at the increase in the threshold for auto-enrolment and the three-month waiting period.



"The main losers from this increase will be part-time women workers, the least-likely group in the workforce to have a pension."

Arts and Entertainment
Sheridan Smith as Cilla Black and Ed Stoppard as her manager Brian Epstein
tvCilla Episode 2 review: Grit under the glamour in part two of biopic series starring Sheridan Smith
Sport
David Moyes and Louis van Gaal
football
News
Former Governor of Alaska Sarah Palin, left, with her daughter, Bristol
newsShe's 'proud' of eldest daughter, who 'punched host in the face'
Sport
New Zealand fly-half Aaron Cruden pictured in The Zookeeper's Son on a late-night drinking session
rugby
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
News
A cabin crew member photographed the devastation after one flight
news
Life and Style
Carol O'Brien, whose son Rob suffered many years of depression
healthOne mother's story of how London charity Maytree helped her son with his depression
Life and Style
food + drink
Arts and Entertainment
The cover of Dark Side of the Moon
musicCan 'The Endless River' carry on the tradition? See for yourself
News
Rob Merrick's Lobby Journalists were playing Ed Balls' Labour Party MPs. The match is an annual event which takes place ahead of the opening of the party conference
newsRob Merrick insistes 'Ed will be hurting much more than me'
Voices
A new app has been launched that enables people to have a cuddle from a stranger
voicesMaybe the new app will make it more normal to reach out to strangers
News
Liam Payne has attacked the media for reporting his tweet of support to Willie Robertson and the subsequent backlash from fans
peopleBut One Direction star insists he is not homophobic
Life and Style
healthFor Pure-O OCD sufferers this is a reality they live in
Life and Style
Sexual health charities have campaigned for the kits to be regulated
healthAmerican woman who did tells parents there is 'nothing to be afraid of'
Life and Style
fashion
Arts and Entertainment
The John Peel Lecture has previously been given by Pete Townshend of The Who, Billy Bragg and Charlotte Church
musicGodfather of punk will speak on 'free music in a capitalist society'
News
peopleAt least it's for a worthwhile cause
News
Shoppers in Covent Garden, London, celebrate after they were the first to buy the iPhone 6, released yesterday
tech
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Pharmaceutical Computer System Validation Specialist

£300 - £350 Per Day: Clearwater People Solutions Ltd: Pharmaceutical Computer ...

High Level Teaching Assistant (HTLA)

£70 - £90 per day: Randstad Education Birmingham: Higher Level Teaching Assist...

Teaching Assistant

£50 - £80 per day: Randstad Education Birmingham: Randstad Education is the UK...

Senior Java Developer - API's / Webservices - XML, XSLT

£400 - £450 Per Day: Clearwater People Solutions Ltd: Our client is currently ...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments