Question to the Department for Work and Pensions:

To ask Her Majesty's Government what action they are taking to support those businesses that will find it difficult to manage the increase in minimum contributions for automatic enrolment pensions for their staff.

Automatic enrolment was introduced to address the fact that millions of people were not saving enough for their retirement, and with the aim of making saving for later life normal for most people in work. It has been a great success with over 9.5 million workers enrolled into pension saving and more than 1.1 million employers having met their duties to date. Reforms on this scale represent significant change, and we particularly recognise the crucial role that employers of all sizes are playing in delivering them.

The independent Making Automatic Enrolment Work review in 2010 specifically considered the impact of the policy on employers and changes to reduce burdens were implement in the Pensions Act 2011.

The planned increases to the statutory minimum contributions - known as phasing - were built into the automatic enrolment reforms from the start. The initial minimum employer contribution of 1 per cent increased to 2 per cent in April 2018. An employer is free to pay more than the minimum at any time, and many are already doing so. There has been a long lead in time to enable employers and individuals to prepare for these increases, with support and communications from the Pensions Regulator and DWP. The increased contributions were scheduled to coincide with changes to take home pay which normally take place at the start of the tax year, to help minimise the administrative burden for employers.

Government is closely monitoring the impact of the increases on both employers and individuals to inform our approach to supporting the second planned increase in contributions from April 2019.