Employer Access

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 employer's decision tree (this link opens the Pensions Regulator's website) or contact us and an adviser will help you.

Q & A's