Industry figures welcomed today’s announcement from the Department of Work and Pensions (DWP) on changes to the automatic enrolment timetable, but some also warned for the dangers of more delays.

National Association of Pension Funds (NAPF) chief executive Joanne Segars said the NAPF is pleased with the new timetable as it will provide clarity for businesses. “Now the government needs to stick to the new timetable and avoid last minute changes that will undermine the success of the reforms. There have been too many delays already.

“These reforms are a once in a generation opportunity to help tackle the UK’s pensions savings crisis. But they require a lot of preparation. Employers need to make important decisions on how to fund the new pensions and what type of schemes they will use. They will also have to decide how they will manage the costs, and how they will set up the payroll.”

Barnett Waddingham partner Clive Grimley said the longer phasing period is good news for employers as it will help them incorporate the financial implications of the changes over a longer period and will help with costs if recessionary pressures continue in the short term.

“From the employees’ point of view, they may be less likely to opt out. However, this change could increase the perception from employees that paying the minimum contribution rates are sufficient.

“It also prompts all parties to watch developments as the timeframe spreads into the next government’s period of office. Could compulsory pensions be a feature in the next election manifestos?”

NOW: Pensions CEO Morten Nilsson added: “It is good to have clarity on dates and confirmation that auto-enrolment going ahead with no further disruption. However, whilst delay for the medium and smaller companies is helpful from those companies’ perspective in the current economic climate, the delay is certainly not helpful from the perspective of their employees in the long term.

“It’s important that people start to save for their retirement as soon as possible and delaying the introduction of auto-enrolment, along with the increase in the minimum rate of employer pension contributions, will have an impact on people’s retirement income in the long term.”

Towers Watson pointed out that minimum contributions will now be fully phased in in October 2018, almost 16 years after the Pensions Commission was asked to investigate under-saving for retirement. The new date is a year later than under the timetable published in December 2009, two years later than under the September 2009 timetable and three years later than had been indicated in 2006, the consultancy firm said.

Towers Watson senior consultant Rudi Smith said: “Auto-enrolment was conceived against a backdrop of rising personal incomes and a growing economy. It will obviously be tougher for employers and employees to absorb the costs of contributions in today’s environment, but paying for retirement is not getting any cheaper. The government is saying there will be no further delays regardless of what happens to the economy, and employers will have to plan on this basis.”

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