The latest in a series of articles that give the basics on key areas of employment legislation. This issue we look at stakeholder pensions
The hard facts
From 8 October 2001, most employers have to offer their employees access to either an occupational pension scheme or a stakeholder pension scheme. This is the Welfare Reform and Pensions Act 1999 (the "Act")
- Section 3 of the Act sets out various requirements that an employer must comply with.
These include the requirement that an employer must:
- Offer relevant employees access to a registered stakeholder pension scheme, having consulted with relevant employees
- Supply basic information about the designated scheme to relevant employees and allow representatives of the scheme reasonable access to the relevant employees in order to supply them with information about the scheme, and
- Deduct the employee's contribution to the scheme from his remuneration, where requested to do so by a relevant employee.
The Stakeholder Pension Schemes Regulations 2000 (the
The Regulations set out exemptions (section 22) from the requirements of the Act where an employer:
- Has fewer than five staff, and
- Offers certain personal pension schemes.
The Regulations also provide (section 23) that certain staff are not considered to be "relevant" staff and therefore employers need not provide access to a stakeholder pension where an employee:
- Can join an existing occupational pension scheme within 12 months of starting work with an employer
- Cannot join their employer's occupational pension scheme because they are under the age of 18 or are within five years of the normal pensionable age for the scheme
- Has not been continuously employed for three or more months
- Earns less than the National Insurance Lower Earnings Limit for one or more weeks within the past three months, and/or
- Is ineligible to make contributions due to a restriction imposed by the Inland Revenue.
Reading around the subject