Tim Sargisson gives an update now the regulations governing the benefit are in force
Stakeholder pensions were introduced earlier this month and by 8 October 2001, firms with five or more "relevant" employees must offer access to a stakeholder compliant pension scheme. Personnel Today provides an at-a-glance guide to stakeholder pensions
What is a stakeholder pension?
A flexible, low-cost, tax-efficient retirement savings plan, which should offer good value to everyone, especially those on low incomes. It should meet minimum standards on cost, access and terms (CAT) standard, namely:
- A maximum charge of 1 per cent of the fund per annum, calculated on a daily basis of 1/365th per day
- The minimum contribution cannot be set at a level above £20. This applies to regular and single contributions. There is no minimum frequency or payment term
How will stakeholder affect employers?
Those with five or more employees will need to provide access to a stakeholder pension scheme from October 2001. Those with an existing pension scheme may be exempt.
Firms needing to offer access to a stakeholder pension, must:
- Designate a stakeholder provider
- Provide information to employees
- Offer payroll deduction for staff contributions
- Enable staff to join the scheme within three months of joining the organisation
- Offer a default investment choice so that staff do not have to consider investment options for their stakeholder payments
Those firms with five or more "relevant" staff that do not offer stakeholder pensions will be liable to fines of up to £50,000. Individuals (such as trustees) will be liable for fines up to £5,000.
What exemptions are there?
Employers running an occupation pension scheme: Thi