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Voluntary Sector Accounting Information
Should you have a stake in the Stakeholder?
I doubt if I am alone when I say that I have kept putting off pension planning! The government has rumbled our collective inability to plan for pensions and is intent on pushing pensions higher up our collective agenda; the introduction of the stakeholder pension was one of the ways of doing this. Here are some answers to questions commonly asked by employers:-
What is a stakeholder pension plan?
Stakeholder pensions are available for the employed, the self-employed and people without any earned income. It is intended to provide a low cost, privately funded and flexible supplement to the basic state pension.
What is the employer's role?
Employers are required by law to choose (designate) a stakeholder pension scheme from a list of registered scheme providers (available from the Occupational Pensions Regulatory Authority known as OPRA) in consultation with their employees. Having chosen a scheme the employer must offer to make the appropriate deductions from the employee's pay and pay them over to the pension provider. This must be done within 19 days of the end of the month in which the deduction was made. OPRA may fine employers for late or incorrect payments.
Does every employer have to offer access to a stakeholder pension scheme?
No, there are a number of exceptions as follows:
Employers with less than 5 employees.
Employers who offer all employees an occupational or group pension scheme( but there are certain criteria that have to be met- see end of article for where to obtain further information).
Employees who earn less than the Lower Earnings limit for at least 3 months in a row.
Does the employer have to contribute to the scheme?
No there is no legal requirement for the employer to make a financial contribution: however this may change in the future.
How does this affect my payroll?
If you are not exempt you will have to process the deductions from an employee's net pay (if requested to do so by an employee) and pay over the deductions to the Pension provider. If asked to make deductions through the payroll the employer must within two weeks of being asked, provide the employee with written confirmation of how they plan to administer the payroll deductions for Stakeholder Pensions.
Want to know more?
This is not the definitive guide, so for further information we would recommend 'Stakeholder pensions, a guide for employers' available free from the Inland Revenue Employer's Orderline 0845 7 646 646; or if you have any questions about providing access to a Stakeholder pension scheme you can ring the Inland Revenue Employer's Helpline on 0845 7 143 143. Also very helpful is the OPRA website which is at www.stakeholder.opra.gov.uk
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