Stakeholder Information for Employers

Q  What is Stakeholder all about?

A  The government introduced Stakeholder Pensions in April 2001, basically to ensure that employers make Pensions available to employees. Full Government Stakeholder Pension Guide.


Q  The name Stakeholder implies some kind of stake or share in something. What does it mean?

A  Absolutely nothing! It is just a name that the government dreamt up.

 

Q  Will it cost me anything?

A  No. Except for the cost of administering the scheme and the deductions from salary. There is no obligation for an employer to contribute to a Stakeholder Pension, but if you wish to you can.

 

Q  What do I have to do and when?

A  The Stakeholder regime has been in place since April 2001. All employers unless exempt, must have one.

 

Q  Could my firm be exempt from Stakeholder Pensions?

A  Only if you can satisfy one of the following:-

  1. You have less than 5 employees.
  2. All of your employees earn less than £95.00(2009/10) per week.
  3. You have an occupational pension scheme that:-
    a) Is open to all employees
    b) Has a waiting period of not more than one year
    c) Does not exclude new members who are more than 5 years from normal retirement date.
    d) Does not exclude members who are 18 or over. 
  4. You have a Group Personal Pension Plan into which you are making employer contributions of at least 3% of basic salary and the plan can be joined within 3 months of the start of the members employment. You must also document the offer of membership and the contribution level in the contract of employment.

Q  What if I want to keep my existing employee pension arrangement but it does not satisfy the Stakeholder exemption?

A  Then you will either have to bring the contribution up to the exemption level or make available a Stakeholder Pension arrangement to run alongside your existing plan.

 

Q  What about advice for my employees?

A  If you install a Stakeholder Pension then generally only limited or no advice is available. This is due to the low costs associated with Stakeholder which do not allow for advice or fees. The government has produced Decision Trees with the intention that this should give sufficient information to employees.

Some advisers will provide an ongoing advice and service on a separate fee basis either at an hourly rate or on a cost per employee. A Stakeholder exempt pension arrangement sometimes has an extra cost built in to pay for advice from the adviser.

 

Q  Will my employees need advice?

A  This is a debatable issue. The government is hoping that information from public sources such as decision trees will be adequate. However many employers may feel that they have an obligation to provide some kind of advice for their employees, although there is no compulsion to do so.

 

Q  What about part time or low paid employees?

A  If you have 5 or more employees, and at least one is earning above the Lower NIC Earnings Limit,  there are no exceptions. A Stakeholder Pension facility has to be provided for all of those employees.

 

Q  What happpens if no employees wish to contribute to a Stakeholder Plan my company makes available?

A  Then you need not do anything. However you will still have to keep the option available in case they change their mind, or for any new employees that may want to join.

 

Q  If I have employees in a Stakeholder Pension and they leave, will I have to do anything?

A  Not apart from taking them off the collection payment schedule. Anything employees wish to know about their plan can be obtained direct from the Stakeholder provider.

 

Q  What about temporary employees?

A  They have to be offered Stakeholder Pensions in the same way as full time employees.

 

Q  With an exempt Group Personal Pension Plan is the 3% minimum employer contribution based on basic or total earnings?

A  Basic.

 

 Q  What happens if I do not set up a scheme to comply with the Stakeholder requirements?

A  The Occupational Pensions Registration Authority can apply a fine of up to £10,000 for a company or £5,000 for an individual.

 

Q  How are contributions paid to the Stakeholder provider?

A  Either direct from the employees bank account or, if the employee insists, by deduction from pay.

 

Q  Do I have to consult with my employees over Stakeholder?

A  Yes. However there are no official guidelines on what form this should take

 

Q  If I deduct contributions from pay how soon do I have to pay the money over to the provider?

A  By the 19th of the month after deduction from pay.

 

Q How much can I contribute to a Stakeholder Pension?

Up to 100% of earnings or £50,000(£40,000 for 2014/15)whichever is the lesser.

 

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