Stakeholder Pensions

Q: What is Stakeholder about?

A: It is the largest reassessment of pensions legislation over the past few decades. For the first time there is a legal obligation on the majority of employers to provide access to pension benefits for employees.

The legislation provides a standard to which all the providers of a Stakeholder pension must adhere. These standards cover charges, flexibility, literature and the obligations of the provider.

Failure for employers to select a designated provider and make this accessible to their employees could result in a fine of up to £50,000.

Q: Does this affect me?

A: It will affect most employers in the UK who employ five or more staff who are aged over 18, within 5 years of retirement and one of which earns over the lower earnings limit of £67 per week.

If you meet the above criteria and do not qualify for an exemption then you must provide access to a Stakeholder pension for your employees.

You do not have to contribute to a Stakeholder pension if a member of staff decides to join your designated provider’s scheme. As the employer you will have to organise for the employees net contributions to be deducted from their net salary and forwarded to the Stakeholder provider by the 19th day of the month following the payroll deduction. Failure to forward these payments on time could result in a fine.

The employer is also required to periodically check to ensure that the designated provider continues to be approved as a Stakeholder provider and must maintain proper contribution records.

Q: What are the main exemptions?

A: You may be exempt if you meet one of the following:-

• Offer an occupational pension scheme allowing all members of staff over 18 and within 5 years of retirement the option to join after one year.
• Offer a group personal pension scheme to all staff and you contribute 3% of their salary.
• Have less than five members of staff or none of your staff earn over the lower earnings limit of £67 per week for this tax year.

Q: How do I find out more and how do I provide access to a suitable scheme for my staff?

A: Useful sources of information are the web sites for the Occupational Pensions Regulatory Authority (OPRA) at or the Financial Services Authority.

To designate a Stakeholder scheme you can either contact a provider direct (a full list of approved schemes will be held on the OPRA website), offer access through an affinity group such as a trade union or seek independent financial advice.

If you would like to ask a specific question or request a more detailed fact sheet please email us.