Since October 2001, it
has been compulsory for certain employers to offer eligible
employees access to a stakeholder pension
scheme.
Access requires that the employer should consult
with its employees on the choice of a suitable stakeholder scheme
provider and then notify all eligible employees of its final
selection.
The employer does not have to contribute to the
scheme but it has to provide a facility whereby the employee's
contributions will be deducted from pay and passed over to the
scheme. If the employee does not want to take advantage of this
facility, they should be able to pay by direct debit.
Employer Exemption
All employers must provide access to a stakeholder
pension scheme unless they are exempt. The conditions for being
exempt are as follows:
- There are fewer than 5 people employed. All
employees count for this purpose, including part-time and
non-permanent workers.
- The company offers all employees access to an occupational scheme that
they can join within one year of starting work.
- The company operates a personal pension plan that
meets the following conditions:
- it is open to all employees except those who are
defined as 'non-relevant' (this term is explained below);
- the company contributes at least 3% of basic
salary to the personal pension;
- the scheme has no penalties for members who stop
contributing or who transfer out to a different scheme; and
- the company deducts the employee's payments and
sends them to the scheme if requested to do so.
- The company has an occupational scheme that is only
open to some employees but the rest have access to a personal
pension scheme which meets the above conditions.
Non-Relevant
Employees
There are employees to which an employer need not
provide access to a stakeholder scheme if they so chooses. These
are known as 'Non-Relevant' employees who are
anyone:
- whose earnings have fallen below the National
Insurance lower earnings limit for at least one week in the last
three months;
- who has worked for the company for less than
three months;
- who is a member of the company's pension
scheme;
- who is not in the company scheme but was free to
join it and declined the offer or opted out;
- who is excluded by the rules from joining the
scheme because they are under 18 or are within 5 years of the
scheme's normal retirement age;
- who is debarred from joining a stakeholder
scheme because of Revenue restrictions (e.g. the employee does not
normally live in the UK).
If your employer is offering to pay contributions
into the scheme that the company provides access to, you can join
that one and still have your own in addition.
Even if your employer is
offering a stakeholder scheme, you don't have to join it. You can
choose your own scheme instead.
Decision Tree
If you are unsure
whether or not your company has to provide you with access to a
stakeholder scheme, try the employee's decision tree (this link open our stakeholder
website) or contact us and an adviser will help you.
Q & A's
Unless exempt, your employer must offer you access to a
stakeholder. To check whether your employer is exempt, refer to our
decision tree. Alternatively, contact us and an
adviser will help you.
Yes. Employers who employ fewer that five people are exempt from
designating a stakeholder.
Your employer does not have to offer you access to a stakeholder
if you already have access to a personal pension plan that meets
the following conditions:
- it is available to all employees who should have access to a
stakeholder pension scheme (except those under 18);
- the company contributes at least 3% of the employee's basic pay
to the personal pension;
- the scheme has no penalties for members who stop contributing
or who transfer their pension; and
- the company deducts employees' contributions from their pay and
passes them on to the personal pension provider if the employee
requests it.
If your GPP meets these criteria but you don't want to join, you
are free to take out a stakeholder of your own. Doing this,
however, means you miss out on the employer's contribution.
You are a 'relevant employee' unless:
- you have been in this employment for less than three continuous
months;
- you are a member of the company's occupational scheme;
- you could not join the occupational scheme because its rules do
not admit people if they are under 18 or they are within 5 years of
the scheme's normal pension age;
- you could have joined the occupational pension scheme but chose
not to do so;
- you joined the occupational pension scheme but then opted
out;
- your earnings have fallen below the National Insurance lower
earnings limit (currently £87 per week) for at least one week
in the last three months; or
- you cannot join a stakeholder scheme because of Revenue
restrictions (e.g. the employee does not normally live in the
UK).
If you are unsure whether you are exempt because of one of these
conditions, speak to your employer. If, having spoken to your
employer, you still need help understanding your rights to
stakeholder access, please contact us.
Employer access is regulated by the Pensions Regulator. You may
want to report your employer to the Pensions Regulator if they are
refusing to designate a scheme and allow you access. Failure to
designate a scheme can result in a fine of up to £50,000.
Click here to be redirected to the Pensions Regulator
website.
