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."

Sport
Laura Trott with her gold
Commonwealth GamesJust 48 hours earlier cyclist was under the care of a doctor
Life and Style
Upright, everything’s all right (to a point): remaining on one’s feet has its health benefits – though in moderation
HealthIf sitting is bad for your health, what happens when you stay on your feet for a whole month?
Arts and Entertainment
Peter Griffin holds forth in The Simpsons Family Guy crossover episode
arts + ents
News
Orville and Keith Harris. He covered up his condition by getting people to read out scripts to him
People
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
France striker Loic Remy
sportThe QPR striker flew to Boston earlier in the week to complete deal
Arts and Entertainment
Gal Gadot as Wonder Woman
arts + entsFilmmaker posted a picture of Israeli actress Gal Gadot on Twitter
Sport
Vincenzo Nibali rides into Paris on the final stage of the 2014 Tour de France
Tour de FranceVincenzo Nibali is first Italian winner since Marco Pantani in 1998
News
Bryan had a bracelet given to him by his late father stolen during the raid
people
Arts and Entertainment
Chris Pratt stars in Guardians of the Galaxy
arts + ents
Arts and Entertainment
Pedro Pascal gives a weird look at the camera in the blooper reel
arts + entsPrince Oberyn nearly sets himself on fire with a flaming torch
News
Danny Nickerson, 6, has received 15,000 cards and presents from well-wishers around the world
newsDanny loves to see his name on paper, so his mother put out a request for cards - it went viral
Arts and Entertainment
Zoe Saldana stars in this summer's big hope Guardians of the Galaxy
filmHollywood's summer blockbusters are no longer money-spinners
Sport
Red Bull Racing's Australian driver Daniel Ricciardo (C) celebrates with Scuderia Ferrari's Spanish driver Fernando Alonso (L) and Mercedes' British driver Lewis Hamilton
sport
Arts and Entertainment
comedy
Arts and Entertainment
Public vote: Art Everywhere poster in a bus shelter featuring John Hoyland
art
Arts and Entertainment
Judd Apatow’s make-it-up-as-you-go-along approach is ideal for comedies about stoners and slackers slouching towards adulthood
filmComedy was dominated by the romcom at its most insufferable
Sport
Tour de France competitor Bartosz Huzarski’s legs have highlighted the gruelling nature of the race, after he posted a picture on Facebook showing extremely prominent veins stretching from his feet and all the way up his legs
Commonwealth Games
Life and Style
Elle Kaye demonstrates the art of taxidermy
food + drinkFood revolution taken a step further in new ‘edible taxidermy’ class
News
A rub on the tummy sprang Casey back to life
video
Sport
Halsall broke her personal best in the 50m butterfly
Commonwealth GamesEnglish swimmer is reborn after disastrous time at London 2012
Arts and Entertainment
O'Shaughnessy pictured at the Unicorn Theatre in London
tvFiona O'Shaughnessy explains where she ends and her strange and wonderful character begins
Life and Style
Workers in Seattle are paid 100 times as much as workers in Bangladesh
fashionSeattle company lets customers create their own clothes, then click 'buy' and wait for delivery
Arts and Entertainment
Red Bastard: Where self-realisation is delivered through monstrous clowning and audience interaction
comedy
Arts and Entertainment
booksForget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Voices
The Express offices in the 1930s when writers (such as Orwell) were paid around £2 weekly
voicesWebsites offering your ebooks for nothing is only the latest disrespect the modern writer is subjected to, says DJ Taylor
Life and Style
A cut above: Katy Guest at The Ginger Pig
food + drinkThe Ginger Pig's hands-on approach to primary cuts
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
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

Data Analyst

£30000 per annum: Ashdown Group: A highly reputable software house is looking ...

Application Support Analyst / Junior SQL Server DBA

£40000 - £45000 per annum: Ashdown Group: An established professional services...

Commercial Litigation

Highly Attractive Salary: Austen Lloyd: CITY - SENIOR COMMERCIAL LITIGATION SO...

BI Developer - Sheffield - £35,000 ~ £40,000 DOE

£35000 - £40000 per annum + competitive: Progressive Recruitment: My client is...

Day In a Page

A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on
It's the best of British art... but not all is on display

It's the best of British art... but not all is on display

Voted for by the British public, the artworks on Art Everywhere posters may be the only place where they can be seen
Critic claims 'I was the inspiration for Blanche DuBois'

Critic claims 'I was the inspiration for Blanche DuBois'

Blanche Marvin reveals how Tennessee Williams used her name and an off-the-cuff remark to create an iconic character
Sometimes it's hard to be a literary novelist

Sometimes it's hard to be a literary novelist

Websites offering your ebooks for nothing is only the latest disrespect the modern writer is subjected to, says DJ Taylor
Edinburgh Fringe 2014: The comedy highlights, from Bridget Christie to Jack Dee

Edinburgh Fringe 2014

The comedy highlights, from Bridget Christie to Jack Dee
Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

The woman stepping down as chair of the Heritage Lottery Fund is worried