Pension reforms delayed

Small firms are to be given more breathing space to enrol millions of employees into workplace pensions, a delay which will allow them to put off the cost of making contributions.

The Department for Work and Pensions said that firms with fewer than 50 employees will get more than a year extra to comply with the new rules, which oblige them sign up staff for pensions unless they opt out.

They had been due to start from Spring 2014. The deadline has been moved until after the next election in 2015.

"Making staff in small businesses wait even longer before they get the right to an employer contribution to their pension is a grave disappointment", said TUC General Secretary Brendan Barber

The National Association of Pension Funds had warned that putting off the scheme would be highly damaging. Workers in small businesses are the least likely to be covered by existing pension arrangements.

Firms will eventually have to contribute at least 3% on top of each employee's salary and the employee at least 4%. Tax relief would take the total contribution to a minimum of 8% of pay.

The biggest companies will have to meet the auto-enrolment rules from October next year, as before.

"We recognise that small businesses are operating in tough economic times so we are softening the timetable for implementation to give them some additional breathing space," said the Pensions Minister, Steve Webb,.

He added that all businesses remain "in scope" to be covered by the new rules.

Pension green paper with a magic formula

The government has laid out its plans to introduce a flat rate pension in the future, worth around £140 a week in today's money.

It's been suggested that the new flat-rate pension could be worth £155 a week if it comes in around 2015.

Now it's emerged that those with under 7 years of National Insurance contributions won't qualify, which will help keep down costs.

Also that it'll go up every year in the same way as the current state pension, by the highest of average earnings, inflation or 2.5% -- the so-called triple lock.

There's more detail about future increases in the state pension age, which is already set to rise to 66 in 2020 and to 68 later on.

Which brings us to the magic formula. The government is considering an automatic calculation which would push up pension age in line with increases in life expectancy.

The alternative would be to hold regular reviews at pre-set intervals to decide on increases.