Stakeholder pension

The stakeholder pensions legislation provides that all businesses which employ five or more employees must designate one or more suitable stakeholder pension schemes and offer access to the scheme/s to all “relevant employees”. Stakeholder pensions are a form of personal pension run by commercial pension providers. They offer a low charging structure, the ability to make low level contributions and no penalties for transferring in or out. Although, the decision as to the choice of scheme/s is ultimately one for the employer, they are nevertheless under a duty to consult with employees before a scheme is introduced.

At present there is no requirement for employers to make contributions to the scheme, although they may do so if they wish. This situation may change in the future.

Non-compliance with stakeholder pensions legislation will incur heavy fines.

Offering a stakeholder pension

All employers should by now be offering their employees access to a stakeholder pension. If you have not already done so, you should now take the following action:

• If you have no pension arrangement in place, you should immediately seek advice from an Independent Financial Adviser to help you designate a stakeholder pension scheme for your employees.

• If you already have an existing scheme you must consider whether the scheme is stakeholder compliant or whether you need to make it so. You should seek advice from your pension provider.