Providing Pension Schemes For Your Employees

The majority of employers are required by law to provide an occupational pension (a company pension scheme) for their employees in order to help them to save for their retirement. However, employers are not obliged to set up a pension scheme, but can simply provide access to one run by a third party.

Employers' Obligations

Since October 2001, it has been compulsory for the majority of employers to offer eligible employees access to a stakeholder pension scheme (see exemptions below). Although the employer does not have to contribute to the scheme it does have to provide a facility whereby the employee's contributions will be deducted from pay and passed over to the scheme.

Exemptions

Employers may be exempt from the requirement to provide access to a stakeholder pension scheme for their employees if they:

• Employ fewer than 5 people, or
• Offer an occupational pension scheme that all staff can join within a year of starting their employment, or
• Offer all employees a personal pension scheme and provide contributions of at least 3% of the employees' basic pay, or
• Offer access to an occupational scheme to some employees, as long as the remainder have access to a personal pension scheme.