The Association of British Insurers has given a cautious welcome to news from the government today that pensions auto-enrolment for small firms is to be delayed until the start of the next parliament.

Today the DWP confirmed during parliamentary questions that small businesses will not have to start automatically enrolling their employees into a pension until the start of the next parliament.

Maggie Craig, director of life and savings at the ABI, said the move made common sense during the tough economic times although advisory firm Hargreaves Lansdown was critical of the move.

She said: "We have always strongly backed automatic enrolment as a good way to get people saving and our view on that remains unchanged. It is imperative that we help employees with no pension start saving as soon as we possibly can.

"We are pleased that the Government still plans to start automatically enrolling employees in 2012. We do realise that the UK is facing huge economic challenges and that small businesses are up against it. We support the Government's efforts to alleviate some of this burden by allowing more time for the economy to recover before smaller companies start enrolling their employees into a pension.

She added: "However it will be very important that this is not allowed to slip and slip. We need to keep up the momentum to address the UK's savings crisis. We need a firm timetable so that employers are clear what is expected of them and the millions of workers in the UK without a pension can start saving for their retirement."

Tom McPhail, head of pensions research at Hargreaves Lansdown, says the government delay to its auto-enrolment programme will mean that small businesses (50 employees and fewer) will have an extra year to prepare for the new rules and the new pension contribution responsibilities. They will now have to comply from 2015 rather than 2014.

He was critical of the move, saying: "The government is showing signs of panic, after 18 months of robust pension reform, they are now capitulating to the unions on public sector pensions and betraying small business employees in the private sector. The present pensions crisis will only get worse if governments aren't prepared to take tough decisions in order to safeguard our long term retirement provision on a sustainable basis.