Valerie Vaz – 2015 Parliamentary Question to the Department for Work and Pensions

The below Parliamentary question was asked by Valerie Vaz on 2015-10-09.

To ask the Secretary of State for Work and Pensions, what assessment he has made of the merits of providing concessions to ease the cost of automatic-enrolment pensions for small businesses.

Justin Tomlinson

In 2010 the independent Making Automatic Enrolment Work (MAEW) review considered the impact of automatic enrolment on small businesses. Following the recommendations of the MAEW review, the Pensions Act 2011 introduced a package of measures to reduce costs and make implementation easier for small employers. DWP’s impact assessments continue to monitor the costs and benefits of automatic enrolment on small businesses.

DWP is working hard to minimise the additional costs of automatic enrolment, particularly for small employers. The National Employment Savings Trust (NEST) was established by the Government specifically to ensure that smaller firms have access to high quality, good value pension provision.

NEST continues to undertake service improvements, including making it possible for small employers to set up and run NEST directly through their payroll software. The Pensions Regulator is also undertaking research and testing in order to enhance its tools and educational material, and to simplify the automatic enrolment process for small employers.

The decision to defer the staging period of small and micro firms from April 2014 to June 2015 brought significant easement to small and micro employers, leading to lower contribution costs and lower administrative costs. Additionally the contribution level is being phased in, in order to help employers adjust to these costs. The minimum employer contribution is currently 1% and this will rise to 3% when the auto-enrolment programme is fully rolled out over the next few years.