15 September 2010
The Department for Work and Pensions (DWP) review of
auto-enrolment is due to be concluded on 30 September. The review
is considering the scope of the proposed new duties on employers to
auto-enrol their employees into a workplace pension and whether the
present plans are the best approach to support the introduction of
auto-enrolment.
Small employers favour raising the minimum earnings required for
auto enrolment into the National Employment Savings Trust
(NEST).
The current qualifying earnings threshold is £5,035 a year
before tax. Increasing this threshold to £10,000 or
£15,000 may mean that the lowest earners do not substitute
their means-tested benefits with a small pension pot which may not
be any more beneficial for them.
Such a move would not be supported by the CBI or the Trade Union
Congress. The Federation of Small Businesses and British Chambers
of Commerce have requested an exemption for employers with fewer
than five employees with a possibility of increasing this to ten
due to the costs involved .
The CBI however have mentioned that 95% of firms are small
businesses and exempting these employees would defeat the purpose
of NEST and getting people to save for retirement.
The National Association of Pension Funds (NAPF) has said that
raising the earnings threshold would exclude millions of women from
receiving the benefit of employer's contributions into a pension
arrangement.
Women currently make up three quarters of the estimated 8
million part time workers and 27% of these earn under £10,000
in a year.
To find out further information on NEST click here
If you are employed by a small business and would like to know
more about the current minimum requirements for employers click
here
