PBR – Five year auto-enrolment timetable starts 2012 – DWP

The full roll-out of personal accounts and automatic enrolment will be delayed until 2017 to reduce the amount of tax relief given away by the Treasury, but large employers will still have to start contributing into the scheme from 2012.

Delivering today’s pre-Budget report, Chancellor Alistair Darling said the decision to delay the roll-out of automatic enrolment and personal accounts was one of a series of “tough but necessary choices” to cut public spending.

The Department for Work and Pensions says delaying roll-out will save the Government around £2.4bn in tax relief between 2012 and 2018. The DWP adds that press reports this morning that the 2012 implementation date was being put back were incorrect.

The DWP says large employers will be required to meet the October 2012 deadline for contributing 1 per cent of band earnings into either a qualifying pension scheme or personal account. But full implementation will now be spread over five and not three years, although the DWP said it had not yet been decided whether large employers would not have to make the full 3 per cent contribution until 2017. Details of how much employers will be required to pay when, and when smaller employers’ duties will commence are being finalised and a further announcement is expected in January 2010.

The delay comes barely two months after pensions minister Angela Eagle announced that the full roll-out of auto-enrolment and personal accounts for micro-employers would be delayed until 2016.

The DWP says this extra delay is necessary in light of the extraordinary circumstances facing the economy.

A spokesman for the DWP says: “Auto-enrolment and personal accounts are both going ahead in 2012 but will be phased in over a longer time period. This will help smaller businesses at a time they are emerging from recession. It has been necessary to make some tough decisions in the context of the economic picture.”

A spokeswoman for Pada says: “It is very much business as usual for us. We are on target for scheme launch in April 2011 and will be ready for automatic enrolment from 2012.”