Dated: 27 October 2010
Commenting on the Government’s proposals announced today relating to auto-enrolment of employees into pension saving, Malcolm Small, Senior Adviser on Pension Policy at the Institute of Directors, said:
“The IoD welcomes these changes ahead of auto-enrolment into pension saving from 2012, which reflect common sense. Enrolment from ‘day one’ of employment, as previously proposed, was always going to present huge administrative complexity for employers, so the 3 month waiting period is welcome. It will enable employees to get information about pension saving in a timely manner, and to make more of an informed decision as to whether it is for them.
“The minimum salary level of £7500, below which people will not be auto-enrolled is also sensible, although the reality is that many will wind up with very small pension pots. However, following yesterday’s announcement of the intention to move away from means tested retirement income benefits, at least those pots will be of direct benefit to the employee, as all saving for retirement, in whatever vehicle, will be ‘safe’.
On the lack of a micro-firm exemption, he added:
“We note that businesses will be required to auto-enrol all employees irrespective of the business size. While we understand the reasoning behind this, we believe that the reality will be that very few employees of micro-businesses will actually be auto-enrolled. It is going to place a huge burden on the Pensions Regulator to attempt to police hundreds of thousand of micro-businesses whose employees may well choose not to engage with pension’s saving.”
