Stakeholder Pensions
New Legislation and Regulations
Now is the time to review the pension arrangements in your firm. Particularly with the changes brought about by the proposed new stakeholder pension, recent legislation and court decisions.
Does the Stakeholder Pension Legislation Affect My Business?
Q. What is a Stakeholder pension?
A. Stakeholder pensions are a new style of pension designed for individuals not in an occupational pension scheme. The new plans will be available from April 2001.
Q. Do I need to provide access to a Stakeholder pension?
A. Basically you must provide a scheme if you employ five or more staff unless:
all your employees earn less than £67 a week in the last 3 months, or
you offer a group personal pension to which you, as an employer, contribute at least 3% of your employees’ earnings, or
you offer an occupational scheme that all staff who are over 18 and who have more than 5 years to go to retirement can join within 12 months
Q. What happens if I currently employ less than 5 people but my workforce grows?
A. Essentially once you employ 5 or more people, you will have three months in which to set up a Stakeholder scheme. You must then offer access to all employees who have been with you for three months or more unless they are eligible to join an occupational scheme or earn less than £67 a week.
Q. How much will it cost an employer to provide a Stakeholder scheme?
A. Basically the only real costs for an employer will be the time involved and, if necessary, the need to set up a system to deduct employees’ contributions from their earnings and pay them to the stakeholder pension provider. Some providers are aiming to make the whole process as hassle-free as possible so it could cost you very little indeed.
Q. I only have a few part time workers. Will I have to provide for them?
A. It depends on their pay. Employers will be exempt from the requirement to designate a Stakeholder pension provider and provide their employees with access to it provided all their employees earn less than £67 a week
Q. What should be my next move?
A. Now is the ideal time to review your company’s pension arrangements. The new legislation makes mandatory demands on thousands of employers. If you have 5 or more employees, one or more of whom earn more than £67.00 a week and if you do not already provide a scheme which exempts you, then you will have to offer your employees access to a Stakeholder pension.
Q. Are there any helpful websites for employers wanting to learn more about Stakeholder pensions?
A. There are lots. The most informative are www.dss.gov.uk and www.opra.gov.uk and www.fsa.gov.uk
The information given is based on our understanding of current Government proposals as at 14 July 2000, is for general guidance only and is not intended to be a recommendation.
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