Stakeholder Pensions
The deadline for employers is 8 October 2001

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Calling all employers...have you designated your workplace stakeholder pension yet?'s not nearly as difficult as you think

You value your staff and want to keep hold of them - because it's an intensely competitive world out there. But although you appreciate that a company pension is a pretty good perk, you're not so sure about taking on all that extra paperwork. Frankly, you've got enough on your plate keeping the business running without having to worry about a pension scheme as well.

However, if you've got five or more employees, you may soon have no choice in the matter - the arrival of stakeholder pensions on 8 October 2001 means that it's time to get a grip and do the right thing.

Stakeholder pensions - the new type of pension available since 6 April this year - offer a simple, low cost, flexible pension option for your staff. From October, many employers will be obliged to offer their staff access to a stakeholder pension scheme (unless they already have a pension scheme in place for their employees).

Those who can't be bothered should be aware that they could wind up with a fine of up to 50,000.

Arm and a leg

Providing access to a stakeholder pension - and that is literally all you have to do - doesn't need to cost you anything. You don't have to run the pension scheme. You don't even have to set the thing up. All you have to do is choose a scheme provider after consulting your staff and allow your staff to contribute directly through the payroll if they choose. You don't have to contribute to your employees' stakeholder pensions - but you can if you wish.

Decisions, decisions

The first question to ask yourself is: "Do I have to offer access to a stakeholder pension scheme, or is my business exempt?"

To find out if you are exempt try using the 'decision tree' for employers on the Opra website at:

This is a web-based facility that asks a series questions to help you decide whether or not you are exempt.

Alternatively, take a look at the government's booklet Stakeholder pensions - an employer's guide. You can get a free copy from the Inland Revenue Employer's Orderline on 0845 7 646 646. Or print a copy off the DWP website at:

But whatever you do, unless you have fewer than 5 employees, don't assume you are exempt! Quite simply, if you have five or more employees and you do not already have a pension scheme in place for your employees, the chances are you'll need to think about stakeholder ... and then take action.

So what do I have to do ...

If you're not exempt, you need to choose a stakeholder pension scheme. The easiest way is to look at the stakeholder pension register on Opra's stakeholder website at  That will give you a full list of all the registered stakeholder schemes together with contact details and links to the pension providers' websites. You can get a free a paper copy of the register by phoning 01273 627600.

Alternatively you could just follow up one of the adverts in the press or on TV. The most important thing to remember is that the stakeholder scheme you choose must be a registered scheme.

If your situation is particularly complicated or you really can't face doing it yourself, then you could talk to an independent financial adviser (IFA) - but make sure you talk to a few so you don't end up paying too much. Don't assume you have to use an IFA - many pension providers will do the work for you at no extra charge.

When choosing a stakeholder pension scheme for your employees, remember that the whole point of stakeholder pensions is that they have to meet certain conditions controlled by law. So you can't go too far wrong. And members can transfer from one stakeholder pension scheme to another without penalties or extra charges. This means that if, later, you want to change your scheme, your employees can move the funds they have already built up to the new provider without incurring any costs. Easy as that.

It's good to talk

You'll need to discuss your choice of scheme with your staff. How you do this will depend on the size of your company, how you communicate with each other already, geographic location and so on. You could:

* set up a meeting and invite your chosen pension provider to give a presentation to staff and answer questions

* use your staff magazine or newsletter to explain your plans and invite comments and questions

* talk to staff or union reps and ask them to present your plans and invite comments and questions

* distribute scheme literature from the pension provider you're considering, asking staff to return their comments to you

* put up a notice on your company noticeboard and ask staff to let you know if they have any comments on your choice of scheme

Your staff need to be told about your plans and have the chance to express their views.

Go for it!

Once you've consulted with your staff - you're free to designate (formally choose) your stakeholder pension scheme.

Give your staff details of the scheme - including name and contact information. Your pension provider should be able to offer literature for you to distribute to your staff.

Remember, your pension provider will probably do most, if not all, of the donkey work involved in setting up the scheme and explaining it to members.

Last but most definitely not least...

You'll need to set up a payroll facility to deduct contributions from employees' pay and send them to the scheme provider, if the employee asks you to.

Your payroll system may already be set up to deal with deducting pension contributions. If not, don't panic... some stakeholder pension providers, as part of their service, may help you to set up a payroll deduction system. This is something worth considering when you choose your stakeholder pension provider.

Remember that you are responsible for paying contributions on time. Take a look at Opra's A quick guide for employers about contributions to personal pension and stakeholder pension schemes, so you know what you have to do (it's on the Opra website at,uk   or call 01273 627600 and ask for a copy).

Hopefully, you can now see the wood for the trees.

Useful publications

* Stakeholder pensions - a guide for employers (Department for Work and Pensions)

* A quick guide for employers about contributions to personal pension and stakeholder pension schemes (Opra)

* DTI Small Business Service Factsheet: Pensions (tel 0870 150 2500)

* Stakeholder pension schemes - an employer's guide (CBI)

Useful contacts

* Inland Revenue Employer's helpline: tel 0845 7 143 143

* OPAS (Pensions Advisory Service) for individual queries:

* tel 0845 601 2923.

Opra (Occupational Pensions Regulatory Authority) tel 01273 627600, website