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Employer Pension Obligations

Last Updated
July 20, 2010
  • You do not have to set up a pension scheme for your employees.
  • You might have to provide access to a stakeholder pension scheme run by a third party.

When you must provide access to a stakeholder pension scheme

  • If you have five or more employees – at least one of which is considered a ‘relevant’ for pension purposes – and do not provide another qualifying scheme.
  • It must also be possible for them to have their contributions deducted from their pay.

Qualifying schemes

  • Occupational schemes that are open to all employees within one year of starting work for you.
  • Personal pension schemes which all employees (18 and over) can join.
  • In both cases, you must contribute at least 3 per cent of each member’s basic salary.

Relevant employees

  • An employee who has been in continuous employment with you for at least three months.
  • An employee who is already a member of your existing pension scheme.
  • An employee who could have joined your existing pension scheme but chose not to.
  • An employee who is not restricted to joining your existing scheme because of their age.
  • An employee who has earned more than the National Insurance lower earning limit each week for the last three months (with the exception of one week).
  • An employee who is not restricted to joining your existing scheme because of HM Revenue & Customs restrictions.

Providing a stakeholder pension scheme

  • Choose a scheme from the Pension Regulator’s list of registered stakeholder providers and discuss this decision with your employees.
  • Allow the provider access to employees at work and give their contact details to your employees.
  • Make pension deductions through the payroll system so employee contributions are deducted from their pay – and keep records of them.
  • Forward contributions to the provider.
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