The Stakeholder Pension
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The Government's stakeholder pension was introduced in April 2001.
Stakeholder pensions are intended to provide a low cost, privately funded, supplement to the basic state pension. How does it affect employers? The 'Welfare Reform and Pensions Act 1999' requires employers to offer their relevant employees access to a stakeholder pension scheme, unless they are exempt. The detailed legislation is set out in The Stakeholder Pension Schemes Regulations 2000. Employers who are not exempt must provide their employees with access to a stakeholder pension scheme. Are you exempt? Employers are exempt from the requirement to provide access to a stakeholder pension scheme if: you employ fewer than five employees; or all employees earn below the National Insurance Lower Earnings Limit; or you offer an occupational scheme which all staff are eligible to join within a year of starting work (except those aged under 18 or within 5 years of retirement); or You offer a Group Personal Pension and it is a term of each employee's contract that the employer will contribute at least 3% of basic pay into a personal pension on the employee's behalf; you offer a payroll deduction facility to members of the scheme; and the scheme imposes no penalties on employees who transfer out of the scheme or stop making contributions. What are the options? As an employer, if you do not meet the exemption criteria then you are required to facilitate a stakeholder arrangement. You do not have to contribute to this arrangement if you do not wish to do so. Alternatively, you may set up a Group Personal Pension plan (GPP) with an employers contribution of at least 3% and meets all the necessary criteria. You can have a combination of the two. This may be the case if you wish the GPP to be available to a selection of employees, with stakeholder arrangements running alongside for those for whom, for whatever reason, you may not wish to contribute. What do I need to do? If you are not exempt then you need to consult with your eligible employees before selecting one or more schemes to offer as applicable. Once you have selected a scheme you must give information about the scheme to your employees, however you must not offer advice to an employee as to whether they should join the scheme or not! You must offer payroll deductions from the employee's earnings. You should review your payroll and accounting systems to see if you will be able to manage the deduction of contributions. You must maintain records of employee deductions and payments to the scheme. Remember there will be penalties if contributions are paid over late to the scheme i.e. employees contributions to the scheme must be paid over within 19 days of the end of the month in which the deductions were made. |