October 26th, 2012 / Insight posted in

Will new pension scheme affect us?

NB writes: I run a small trading company that employs 30 staff and I have received a mailshot about the government´s new stakeholder pension-scheme plans. We already operate a company pension scheme for the more senior staff and the directors. Will the new proposals affect us?

The new proposals are aimed at encouraging people to save for their own retirement, reducing the burden on the state. The government wants to ensure that workers who do not have access to an employer´s scheme have access to a stakeholder pension scheme. It is particularly aimed at workers who earn between £9,000 and £20,000. These schemes will need to meet minimum standards on cost, access and terms. The maximum yearly administration charge for these new stakeholder schemes has been set at 1% of the fund. Employers such as your company have an important part to play in offering new stakeholder pensions to all workers. This will mean committing time and money. Any company that employs more than five people and does not already have a company scheme for all staff members will be affected by the government´s new requirement. Companies will have to be able to give information to workers about a chosen stakeholder pension, make deductions from their pay and pass on the contributions to the chosen scheme. This system needs to be in place by October 2001. New staff must be able to join any scheme within three months of starting work. The proposed new legislation is planned to operate from April 2001. You need to review your current scheme and either include all workers in it or set up an alternative stakeholder scheme for those who are excluded. At present there are no plans for any compulsory company contributions to the new stakeholder schemes. The object is to make it easier for workers to make pension contributions.