The Pensions Regulator

Guidance for employersGuidance for employers

.

.

.

Designating a stakeholder scheme

Identifying a stakeholder pension scheme

'Designation is the term used to describe the process where an employer formally selects a stakeholder pension scheme which his or her employees are invited to join.

An employer can pick a scheme by:

• looking at the list of registered stakeholder pension schemes on the the Pensions Regulator's website;
• looking out for stakeholder pensions advertising;
• choosing a stakeholder pension scheme offered by a provider;
• using the services of an IFA or consultant to identify a scheme;
• choosing a scheme specifically for people in his or her type of business; or
• asking employees for their views.

Having identified a stakeholder pension scheme the employer must:

• make sure the scheme is on the Pensions Regulator's register of stakeholder pensions; and
• consult with employees and their representatives about the choice of scheme.

When the employer has decided on a scheme they should formally record the decision and:

• tell employees which scheme is designated; and
• give staff information about the scheme.

Employers must designate at least one scheme which will allow all relevant employees to join. Employers can designate more than one scheme if they wish.

Employees may join any scheme, but can only request payroll deductions relating to the employers designated scheme.

Before choosing a registered scheme provider, employers should look at their payroll and accounting systems to assess how easy it will be to manage the deduction of contributions. If this is not going to be straightforward, it might be worth selecting a provider who can set up payroll deduction facilities as part of their service.

Once a scheme has been designated, the employer has a responsibility to check periodically that the scheme is still registered with the Pensions Regulator. However, an employer is not liable for the performance of the designated stakeholder scheme.

Consulting with employees

The Welfare Reform and Pensions Act 1999 requires employers to consult with relevant employees and any organisations representing them before designating a scheme.

The consultation process is not laid down in regulations, so the means of consulting employees is for the employer to decide. There may already be a formal consultation procedure established; employees may be given details at a meeting; or they may be sent information and then asked for their views before the employer makes a final decision.

Employers only need to consult 'relevant employees - that is those who would be eligible to join the scheme.

Employers may also choose to provide additional information to employees, such as DWP or FSA leaflets.

Providing details of the scheme(s)

Once an employer has chosen a registered scheme, they must give certain information to employees about the scheme. This must include the scheme name and address. It may also be helpful to supply a telephone number or other contact details.

Its possible that the scheme may produce its own literature that could be used for this purpose. Employers may decide to allow the scheme providers to visit or contact employees in the workplace.

Time limits for designating a scheme

An employer who was previously exempt will have three months to comply from the time when he or she becomes liable under the regulations.

An employer who ceases to be liable and then becomes liable again, will have three months to designate a scheme from the point of becoming liable once more. For example, an employer with six employees is liable to comply, however if two people leave then the employer no longer has to comply. If the employer subsequently hires a further person they will once again be subject to the requirement.

If the employer decides to withdraw from the designated stakeholder scheme they must designate a new scheme before withdrawing from the previous one

If the employers designated scheme has its stakeholder registration withdrawn, the employer will have four months to designate a new scheme.

Provision of advice

An employer can provide help and guidance, give additional information or interpret the information, but should be careful not to advise employees. The provision of financial advice is strictly controlled by the FSA.

Employees wishing to join a different scheme

If an employee is unhappy with the designated scheme, they can choose their own scheme; but in this situation individuals will be responsible for making their own payments to the chosen scheme. If a new employee is already contributing to a different scheme they can continue to pay the provider themselves, or transfer to the employers designated scheme in order to benefit from payroll deductions.

If requested by the employee, the employer must deduct contributions from the employees salary for payment into the designated scheme, or any previously designated schemes to which at least one employee is still contributing. However, they may choose to help their employees by paying into any scheme of the employees choice.

.

.

.