Pensions minister Steve Webb has defended auto-enrolment against claims it will lead to employers 'levelling down' their pension provision in line with the minimum standards under the new rules.
Webb (pictured) said he believed employers under pressure would not look to employee pensions as the first avenue for cuts. 'It would be a very hard conversation for an employer to say, "things are tight so we are putting less into your pension",' he said. 'I suspect some savings will come from lower pay year on year.'
Adam Marshall from the British Chamber of Commerce said businesses were unprepared for the introduction of auto-enrolment, as it was just one of a number of changes to workplace legislation to be introduced. 'Levels of awareness are extraordinarily low,' said. 'Employers, especially SMEs, don't realise there will be huge changes to their labour cost round the corner.' He also criticised steep fines the Pensions Regulator would levy on firms for non-compliance.
Webb said his first aim was to extend the take-up of pensions at all levels but that he would also look at ways to encourage people to increase the proportion they saved the longer they have been saving.