Stake holder pensions - UK advice online

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Individual stake holder pensions are available to most of us in the UK, but if you are employed by a company with five or more members of staff, by law a company scheme should be made available to you. Current legislation stipulates that employers must 'consult, designate and offer employees access' to a stakeholder pension, regardless of whether employees work on a full or part time basis.

Employers are not obliged to offer a company scheme to all workers. This is generally down to one or more of the following reasons:

1. The employee is under eighteen
2. The employee has been employed for less than three months
3. The employee earns less than the lower earnings limit (in 2003/2004 this was set at £4,004 per annum or £77 per week)
4. The employee is not a permanent UK resident

What if my employer doesn't offer a scheme?

If an employer is not exempt, but fails to provide employees with a stakeholder scheme, he may incur a fine of up to £50,000 by the Occupational Pensions Regulatory Authority (OPRA).

Does my employer have to make contributions into my pension?

Your employer is not obliged to finance your pension in any way, although you will find that many companies offer to match workers' own pension contributions, or will pay a set percentage of their earnings, usually somewhere between three and six percent.

How is the pension paid?

Your employer should deduct your contributions from payroll, which means that your payment automatically comes out of your salary. You do not pay tax or National Insurance on this.

What if I don't want to pay into a pension?

You are not obligated to make payments, although this may mean that you do not qualify for employer contributions if the company you work for has opted to pay into staff pensions.

My employer wants me to change to a different pension provider. Is this allowed?

If you agree, transferring the fund to another provider is fairly straightforward; however your employer can not force you to move and must continue to deduct your payments from your salary into the initial fund if that is what you want.

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