Stakeholder Pensions

Monitoring Stakeholder Pension Schemes

OPRA

• The Occupational Pensions Regulatory Authority (OPRA) now the Pensions Regulator is responsible for registering stakeholder pension schemes and ensuring that they continue to meet the conditions necessary for the stakeholder pension schemes to be registered.
• OPRA also regulates the requirement for employers to offer access to stakeholder pension schemes. If OPRA finds that an employer who is not exempt is not offering employees access to a stakeholder pension scheme, OPRA will make the employer aware of their legal responsibilities.
• OPRA is also responsible for making sure that employers follow the rules for paying contributions to the scheme providers. These rules relate to late and incorrect payments. By law if a stakeholder pension scheme provider does not receive the correct amount by the date it is due, they must report this to OPRA.
• OPRA has the power to fine employers or take them to court if they fail to adhere to the rules.
• OPRA also has to power to impose penalties on pension providers

PENSION PROVIDERS

The pension providers (stakeholder manager or trustees) have a statutory duty to report to OPRA:

• Late payments
• Payments that are not made
• Reduced payments that are not explained

Providers must send a report to OPRA if a contribution from the employer or employee has not been received by the due date, even if the payment turns up later. OPRA must receive the report by the 30th day after the due date. If a payment has not been received by the 60th day after the due date, the provider must send a report to the member. The report must be sent to the member by the 90th day after the due date. Providers may be subject to a civil sanction by OPRA if a report is not sent to the member.

Employers must maintain payment records and tell the scheme provider if there are any changes.

The Penalties

Employers may incur a civil penalty from OPRA if they fail to:

• Make correct payments by the due date
• Set up records of payments made
• keep records up to date § send records to the scheme provider
• tell the provider about any changes

The maximum fine possible is £50,000 for a company or £5,000 for an individual.

Where there is fraudulent intent, the penalty may be criminal.

OPRA is less interested in punishing people than in getting things done correctly. Inadvertent mistakes are unlikely to be punished if they are put right promptly.

OPRA is not likely to impose penalties on employers who have not given their employees access to a stakeholder pension scheme, as long as the employer can show that they are currently putting a scheme in place. However OPRA will consider imposing penalties on employers who deliberately ignore their responsibility or avoid sorting out the problem.

Pension providers may also incur civil penalties if they:

• fail to notify OPRA of late or missed payments within 30 days of due date
• fail to notify the member within 90 days of payments that are more than 60 days late, or
• fail to send the scheme member (i.e. the employee) an annual statement containing dates of payments and amounts.