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, he 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 scheme 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.
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 or give our Helpline a call on 0845 6012923 and an adviser will help you. Alternatively, you can email us. Even if your employer is offering a stakeholder scheme, you don't have to join it. You can choose your own scheme instead.
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. Again, if you are unsure, ring the Helpline on 0845 6012923.
Non-Relevant Employees
There are employees to which an employer need not provide access to a stakeholder scheme if he 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).
Within the next few years the Government will review the exemptions for firms with less than 5 employers and those who provide a qualifying personal pension scheme.
- How can I find out if my employer has to offer me a stakeholder?
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Unless exempt, your employer must offer you access to a stakeholder. To check whether your employer is exempt, refer to our decision tree. Alternatively, call our Helpline on 0845 6012923 or email us.
- My employer is saying he is exempt because he only employs three people. Is this right?
Yes. Employers who employ fewer that five people are exempt from designating a stakeholder.
- My employer has offered me membership of his GPP. I’d rather join a stakeholder but he won’t arrange this for me. What can I do?
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.
- I have been told I am not a relevant employee and therefore not eligible to join the employer’s designated stakeholder. What does this mean?
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.
- My employer is refusing to designate a stakeholder, even though he is not exempt. What can I do?
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.
Q & As
