The Occupational Pensions Regulatory Authority (Opra) is responsible for enforcing the new requirement for Stakeholder pensions.
If you’ve yet to start the ball rolling, fret not, there’s still time to get your act into gear.
Yes, the new requirement will mean more paperwork but you can’t stick your head in the sand. If your shop or bike and bits supply company employs five or more people you’ve got until October 8th to get your pensions provision in order.
Those who can’t be bothered should be aware that they could wind up with a fine of up to £50 000.
Stakeholder pensions – the new type of pension available since 6th April this year – offer a simple, low cost, flexible pension option for your staff.
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.
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: http://www.stakeholder.opra.gov.uk/decisiontree
Alternatively, take a look at the government’s booklet Stakeholder pensions – an employer’s guide. Print a copy off the DWP website at:
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 http://www.stakeholder.opra.gov.uk/registrysearch.asp. 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 but 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.
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
* 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.
Once you’ve consulted with your staff – you’re free to 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 http://www.opra.gov,uk, or call 01273 627600 and ask for a copy).