Stakeholder Pensions For Employers

If an employer has a staff of more than five people, then they have a statutory duty to make sure that a stakeholder scheme is open to all staff.

There are exemptions, however. If any of your workers earns less than £79 a week (for 2004/2005) then you are exempt.

Likewise, if you already offer your own pension scheme then there is no obligation to staff, provided they do not have to wait more than 12 months to join it.

If you need to put a stakeholder pension plan in place for staff, then you need to choose a registered stakeholder pension plan that has already been approved by the Occupational Pensions Regulations Authority (OPRA, tel 01273 627600), as well as involve some basic staff discussion in the final choice. Any final choice must be eligible for ALL your current staff.

Obviously you will need to arrange to deduct contributions from your employees’ pay for any scheme. Bear in mind that any stakeholder pension cannot charge more than one percent in charges a year, and that minimum contributions begin at £20 a month.

If staff disagree with your choice, then they can elect to contribute to a separate stakeholder pension scheme, though they would be responsible for setting up any contributions arrangement.

Be prepared to accept less – or more – pension contributions from employees as time goes on. By law, you are required to offer staff at least one opportunity a year to vary contributions.

Their contributions – after their net pay – can either be a fixed sum, or a fixed percentage of their wages.