Broader Horizons - Stakeholder Pensions
Tony Blair has promised to cut red tape, yet small businesses face a seemingly endless stream of new rules. Gary Lockwood charts the Intricacies of Stakeholder Pensions.
Qualitative researchers are hard pressed without having to cope with the constant stream of new legal and financial requirements. One looming deadline is, however, the introduction of the 'Stakeholder Pension' in April 2001. These, basically, are quite like personal pensions and are aimed at 'middle earners' (£10k to £20k p.a.) without pension provision.
If you are an employer you can take this as an opportunity to improve your current pension offer to employees by adapting what you have. If you are not currently offering any form of pension you will have to select an approved scheme but remember to consult your staff.
The scheme, of course, permits a number of exemptions. Don't worry if, for example, you employ fewer than five people or pay everyone £67 per week or less! Mind you, 'employees' include part-timers, those on short-term contracts and even students doing summer work for over three months. There is, currently, no obligation on the employer to pay into their workers' stakeholder pensions although some commentators believe that it will come if employee take up is low.
Employees will be able to pay in from £20 per month and can stop without penalty. The employer is responsible for administering these payments so more work here! They need, too, to have all this sorted out by October 2001. That sounds quite a safe distance away but being sorted out means that you will have chosen a scheme (or adapted an existing one), consulted your employees, got the scheme registered and that the whole thing is in operation.
Any past brush with officialdom tells us that this could be a long drawn out affair so start now. The fine for missing the October 2001 deadline is up to £50,000. It helps to focus the mind!
The qualifying criteria for stakeholder pensions and possible exemptions are complex and not always easy to understand, so it's best to seek professional help.
Our current understanding is that you can start a separate scheme from an approved list or adapt any existing pension scheme you might have.
For smaller organisations this is more likely to be a Group Personal Pension and not an Occupational scheme. Your pension provider will be able to tell you if either scheme can provide the stakeholder benefits required.
For a Group Personal Pension, for instance, these requirements include the employer contributing a minimum of 3% of the employee's gross pay to the scheme and any compulsory employee contribution not amounting to more than 3% of gross salary. There should also be no exit charges and any 'waiting to join' period should be no more than three months.
Occupational pension schemes have their own requirements to allow 'exemption' from the new stakeholder pension plan and you would need to check it with the pension provider and your accountant.
Also use the professional press and your local social security office. The latter will be able to provide detailed information, but it helps to have it all explained by a friendly advisor.
It's tempting to put such issues on the 'Action Tomorrow' list, but it really does pay to keep an eye out for new legislation and prepare well in advance. Any information provided in these articles should not be taken as Gospel more of a spur to researchers to seek professional advice. You won't regret it!
This article was first published in InBrief magazine, January 2001
Copyright © Association for Qualitative Research, 2001