Abolition of Requirement to Provide Access to Stakeholder Pension Schemes
Until recently it was a legal
requirement for all UK employers with 5 or more employees to
designate and facilitate access to a stakeholder pension
scheme. An employer was obliged to provide information to its
employees about its designated stakeholder pension scheme, although
it was not obliged to pay any contributions into such a
With the introduction of the
new auto enrolment regime on 1 October 2012, employers are no
longer required to provide access to a stakeholder scheme.
The consequence of this is that a UK employer is no longer required
to offer any form of access to pension to its employees until it
reaches its auto-enrolment staging date.
Where an employer has
employees who were already members of a stakeholder scheme on 1
October 2012, providing they had made a least one regular
contribution to the scheme prior to that date, those employees may
continue to have contributions deducted from their salaries and
paid over to the designated stakeholder scheme.
Where an existing member of a
stakeholder scheme requests his employer to cease deductions, the
employer must notify the employee that it is no longer required to
make deductions and pay them over to the stakeholder scheme on the
employee's behalf but the employee can still make payments directly
to the stakeholder scheme, subject to the rules of the
If an employer has a
stakeholder scheme in place, it can continue with such scheme once
it reaches its staging date providing that the stakeholder scheme
meets the criteria for a "qualifying scheme" under the new
As the staging dates for
auto-enrolment run from 1 October 2012 to 1 February 2018,
depending on the size of the employer, an employer may not be under
a duty to provide access to a pension for its employees for a
number of years. Details of how to determine your staging
date can be found on The Pensions Regulator's website www.thepensionsregulator.gov.uk.
Posted on: 21/12/2012
This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.
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