Stakeholder Pensions

As you may know, the new stakeholder pension was introduced in April 2001. From October 2001 Employers are legally obliged to provide all their employees with access to a Stakeholder Pension Scheme. Employers who fall into any of the following exemptions are not required to provide access to a stakeholder pension scheme.

• Employers with less than 5 employees
• Employers who already offer Occupational Schemes
• Employers who have Group Personal Pension (GPP) schemes where the employer is contributing at least 3% of employee's basic pay
• Employees who may be ineligible to contribute, e.g. under age 18, within 5 years of retirement date or earning below the lower earnings limit. This applies to both Occupational schemes and GPP's

The Welfare reform and Pensions Act requires all companies with five or more employees (with certain exceptions) to:

• Provide a stakeholder pension scheme to their workers
• Consult with their workers about pension provision
• Inform and educate workers about the new scheme
• Allow the pension scheme trustees access to the workplace to talk to members
• Deduct pension contributions from workers' pay packets and pass them promptly to the pension scheme, with criminal penalties for delay

Employers do not have to contribute to the schemes themselves but are, of course free to do so.