Abolition of Requirement to Provide Access to Stakeholder Pension Schemes

Until recently it was a legalrequirement for all UK employers with 5 or more employees todesignate and facilitate access to a stakeholder pensionscheme. An employer was obliged to provide information to itsemployees about its designated stakeholder pension scheme, althoughit was not obliged to pay any contributions into such ascheme.

With the introduction of thenew auto enrolment regime on 1 October 2012, employers are nolonger required to provide access to a stakeholder scheme. The consequence of this is that a UK employer is no longer requiredto offer any form of access to pension to its employees until itreaches its auto-enrolment staging date.

Where an employer hasemployees who were already members of a stakeholder scheme on 1October 2012, providing they had made a least one regularcontribution to the scheme prior to that date, those employees maycontinue to have contributions deducted from their salaries andpaid over to the designated stakeholder scheme.

Where an existing member of astakeholder scheme requests his employer to cease deductions, theemployer must notify the employee that it is no longer required tomake deductions and pay them over to the stakeholder scheme on theemployee's behalf but the employee can still make payments directlyto the stakeholder scheme, subject to the rules of thescheme.

If an employer has astakeholder scheme in place, it can continue with such scheme onceit reaches its staging date providing that the stakeholder schememeets the criteria for a "qualifying scheme" under the newauto-enrolment regime.

As the staging dates forauto-enrolment run from 1 October 2012 to 1 February 2018,depending on the size of the employer, an employer may not be undera duty to provide access to a pension for its employees for anumber of years. Details of how to determine your stagingdate can be found on The Pensions Regulator's website www.thepensionsregulator.gov.uk.

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.