Employers failing to provide staff with stakeholder pension access

Almost half of all UK employers are breaking the law by failing to provide
employees with access to a stakeholder pension scheme.

This is the conclusion of a survey of almost 1,300 employers and advisers
conducted by solicitor Fox Williams. While all of the respondents had five or
more employees (the threshold for provision of access to a stakeholder pension
scheme under the Stakeholder Pension Schemes Regulations 2000), only 55 per
cent provided some sort of scheme for all or some of their employees.

Helen Monson, employment specialist at Fox Williams, said: "Employers
who are in breach of the regulations may not be aware of the requirements or
may simply [and, misguidedly, since there is currently no obligation to
contribute to a stakeholder pension scheme, merely to facilitate access to it]
be trying to save costs by not implementing a pension scheme. However,
non-compliant employers should note that they may face a penalty of up to
£50,000 for failure to comply."

Other findings included:

– 11 per cent of respondents offer a defined benefit (final salary) pension

– 11 per cent of respondents offer a defined contribution scheme for new
employees and a defined benefit scheme for existing employees.

– 22 per cent of respondents require employees to make contributions to the
pension arrangements.

– 66 per cent of respondents have a waiting period for employees during
which they are not eligible to participate in the pension arrangements. Some
operate age limits and some provide backdated pension contributions once the
eligibility criteria have been satisfied.

– 55 per cent of respondents have noticed an improvement in recruitment and
retention rates as a result of offering pension arrangements.

– All respondents said they had no plans to close, amend or withdraw their
pension arrangements within the next year.

– 55 per cent of respondents have changed the basis of their pension
arrangements for employees within the last two years such as allowing new
categories of employees to join, merging pension schemes following transfers
and introducing new schemes.

– 11 per cent of respondents have moved from defined benefit to defined
contribution, personal pension or stakeholder schemes within the last two

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