Stakeholder pension schemes

10 Oct 2012

The stakeholder pension designation requirements were repealed on 1 October 2012.  This means that employers employing five or more employees are no longer required to provide access to a stakeholder pension scheme.

Transitional arrangements require that existing schemes continue for employees who have had at least one contribution deducted from their pay on or before 1 October; however, continuing schemes must meet the conditions for new Qualifying Schemes under section 16 of the Pensions Act 2008. 

Our view:

We do not know why the Government has done this because the repeal of the stakeholder pension requirement is not tied to auto-enrolment, although that will come to all employers during the next five years.  The change means that new employers will not have to nominate a pension scheme until they are required to auto-enrol. New employees and existing employees not covered by the transitional arrangements will also no longer have to be given access to a stakeholder pension.

We anticipate most existing stakeholder schemes will satisfy the conditions for new schemes but employers should verify this with their pension providers.