1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184
185
186
187
188
189
190
191
192 
Senior service
Page 36
If you've noticed an error in this article please click here to report it so we can fix it.
With the government and the opposition vying with each other to announce new initiatives, what are employers' pension responsibilities in law? Pat Hagan reports.
pensions have certainly been hogging the headlines in recent weeks. First the government mooted paying lumpsums of up to £30,000 for anyone agreeing to defer their state pension to age 70. Then the Tories vowed to restore the link between state pensions and earnings (yes.we know it removed them in the first place, but politics is politics). And in between, Chancellor Gordon Brown proposed establishing a protection fund to guarantee workers access to their occupational pension schemes if their employer goes bust.
Politicians across the political divide realise that with an ageing population the issue of financial security in old age is of growing importance to the electorate. But how does the law stand in terms of company-run pension schemes, and what are employers' obligations to their staff?
Do employers have to offer a company pension? Occupational pension schemes are not compulsory. But if a company does run one it must make it available to staff and agree to pay a substantial part of the cost of providing the scheme They usually provide both pension and death benefits and must be run separately from the employer's business.
Do employees have to join a company scheme? No Its entirely voluntary and a member of staff can opt to take out a personal pension instead. It's even possible to have both, providing the occupational pension scheme only provides death benefits.
What rules govern occupational schemes?
Under the Pensions Act 1995 there is a strict legal framework for the running of company schemes. The rules include allowing members of the scheme to have a say in who is elected as trustees as well as unrestricted access to annual reports, trust deeds and rules. There must also be an official complaints system and if that doesn't work a member has the right to go to the Pensions Advisory Service Ombudsman. Money paid in must be kept in separate accounts to the main business so it cannot be siphoned off in the event of barilu-uptcy.
What about stakeholder pensions?
Stakeholder pensions were introduced in 2001 and are designed to provide a low-cost,privately funded, supplement to the basic state pension. They are designed to cater for employees who work for firms with no company scheme.
Who has to provide stakeholder pensions?
It varies. But essentially, if your firm employs more than live staff and does not have its own scheme, the chances are it will have to provide a stakeholder scheme. The Occupational Pensions RegulatoryAuthority,which oversees stakeholder pensions, has a 'decision tree' on its website to help firms work out whether they need to have a scheme. Check out www.stakeh older.opra.gov. uk/decisiontree Is there a penalty for companies that don't?
A company that fails to fulfil its obligatioi to provide a stakeholder pension could win( up with a fine of £50,000. Any firm more that two years old would have little excuse for no complying with the law by now. New companie need to investigate their pension obligations a soon as possible after setting up.
Are any employees not covered?
An employer does not need to set up stake holder pensions for staff who can join al existing occupational scheme within 12 month of starting work. The same applies to anyoni employed for less than three months, worker under 18, and staff within five years of tin normal pension age.
How does a firm choose a stakeholder scheme? Firms can only use schemes registered with tin Occupational Pensions Regulatory Authorit) A list of approved schemes is available at wv w.stakeholder.opra.gov.ukiregistrysearch.asr. An employer can contribute to the scheme bu is not legally obliged to.
How would the proposed pension protection fund affect employers?
The fund would he financed with compulsor. levies imposed on companies running fina salary or defined benefit schemes. The govern merit hopes the plans, which are at an earl: stage, would stop workers being deprived of till promised pension benefits when they retire. I] recent years many firms have shut down 'fina salary' schemes because of falling returns fron stock markets. However, the Confederation o British Industry fears such levies would be significant burden for employers.