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&#39Phantom&#39 stakeholder haunts the Government

The Government faces a grilling this week over stakeholder regulation


loopholes which IFAs say unscrupulous employers could use to set up phantom


stakeholder schemes.


Conservative pensions spokeswoman Jacqui Lait will put questions to the


Government at a stakeholder standing committee on schemes which meet the


current regulations but effectively allow employers to shirk their


responsibilities.


The Opposition has been alarmed over a number of loopholes which allow the


setting up of phantom schemes.


Experts say these include an employer offering a death-in-service scheme


which means they can claim employees have access to an occupational scheme


although it does not offer pension benefits.


Clerical Medical pensions strategy manager Nigel Stammers says: “Employers


could use a bluff scheme by asking employees to match their 10 per cent


contribution. If the employee cannot afford this, the employer is let off


the hook as it can still say it offered a stakeholder scheme. It is up to


the industry not to abuse these loopholes. All that will happen is the


Government will close the loopholes and impose extra complications to the


scheme.”


Torquil Clark pensions development manager Tom McPhail says: “I know of


some advisers who have been asked to set up money-purchase schemes with 1


per cent payable as an employer contribution. The fact it is rubbish is


largely irrelevant as far as the legislation goes.”

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