21 March 2017

New businesses offered a reprieve

The government has confirmed that new businesses will be offered a reprieve of up to three months before they have to enrol their employees in a workplace pension.

This reprieve is already in place for existing companies when they reach their staging date. However, it does not exist for new businesses entering the market.

The rule change is targeted specifically at employers whose employee headcount means they are automatically bound by auto-enrolment rules. Under current rules these new employers would have “near instantaneous AE duties applied to them.” The new rules come into force in April. They will ease this requirement, giving firms more time to deal with official administrative requirements for enrolling a new worker.

The rule change will also amend the auto-enrolment “duties trigger” for new businesses. Currently, the trigger date is the day on which PAYE income first becomes payable to any new worker. This means the employee couldn’t be automatically enrolled into a pension scheme until up to a month after starting work.

In future new businesses will have to comply with auto-enrolment legislation from the date the first worker begins his or her employment. The government says this change would make it easier for The Pensions Regulator to do its job.