Stakeholder Pensions

2. The Employer's Role

All employers (with certain exceptions, see 3) are required by law to make stakeholder pensions available to their employees.

2.1 You should have a designated stakeholder pension scheme for relevant employees.

• Consult your staff about which scheme to choose. While you should consider their views, you are not obliged to act on them.
• Ensure that the designated scheme is registered with the Pensions Regulator (formerly Opra).

2.2 You must make your employees aware of the scheme you have designated, but you do not need to promote it actively.

• You must be prepared to pass information about the scheme to your employees, or to allow the provider to do so.
• Your provider should produce most of the marketing materials.
• You need some system for answering employees' questions but do not give employees individual advice.
• You can encourage staff to invest in a pension, but do not recommend one particular scheme.

2.3 You must deduct the employee's contributions from pay, if asked to do so, and forward them to the provider of the designated stakeholder scheme.

• The employee decides on the size of his or her contributions. He or she can now choose to put up to 100 per cent of their earnings into pension funds, and provided they are registered with HM Revenue & Customs, the whole amount will qualify for tax relief.
• Employees must be allowed to change the level of their contributions, but the employer need not accept more than one change every six months. They can ask you to stop deductions at any time. If this is the case, you do not have to restart them until six months is up.
• Deductions are made from earnings after tax. HM Revenue & Customs will credit basic rate tax relief for all members to the stakeholder pension provider later. Higher rate tax payers can claim additional relief through self-assessment tax returns.
• Contributions deducted from pay must be paid to the provider by the 19th of the following month.