Small firms to be exempt from staff enrolment rule

SMALL companies are to be exempted from the government’s automatic pension enrolment scheme, the chancellor is expected to announce tomorrow.

The scheme will be rolled out from 2012, but allowing small firms to delay the changes should help them through the economic downturn without the additional burden of paying for more pensions.

Ministers had previously defended the plans as crucial to helping workers save for retirement, as the scheme gives an “opt-out” not an “opt-in.”

The rule would mean five to eight million workers saving for a pension for the first time – though now the numbers will be millions lower.

“There was always the risk that the Government would lack the courage of its convictions and back away when push came to shove,” said actuary Barnett Waddingham’s Malcolm McLean. “The extra costs could perhaps have been partly offset by greater fiscal help to SMEs via the tax system.”