Stakeholder Pension Schemes

Stakeholder pension schemes were introduced on 6 April 2001, and are aimed at individuals on low earnings, with no pension provision.

Employers with five or more employees who do not provide access to a personal or occupational pension scheme, may be required by law to offer their employees access to a stakeholder pension scheme.

An employer can select a scheme by seeking the advice of an independent financial advisor, or by making their own enquiries. Having identified a scheme, the employer must ensure that the scheme is on the Pensions Regulator's register of stakeholder pensions, and consult with employees and their representatives about the choice of scheme.

Providing access to a stakeholder pension scheme does not mean the employer has to set it up and run it. It is up to the individual employee whether or not they decide to join a stakeholder pension scheme.

Employees who are members of stakeholder pension schemes pay National Insurance contributions at the standard not contracted-out rate, ie contribution Table letter A. Do not use any other Table letter. If an individual contracts-out of the State Second Pension using a stakeholder pension plan, HMRC will pay a rebate of National Insurance contributions into their stakeholder plan.

Information on stakeholder pensions can be found on the following sites:

http://www.pensionsadvisoryservice.org.uk/

http://www.thepensionsregulator.gov.uk/

http://www.thepensionservice.gov.uk/

Article reproduced from HM Revenue & Customs Employer Bulletin, Issue 30.