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 scheme.

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 scheme.

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 auto-enrolment regime.

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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