View more on these topics

Stakes and ladders

Employers are holding out until the general election before tackling stakeholder, fearing a possible change of Government could mean a change in stakeholder.

Opra is concerned that stakeholder legislation on employers advising on pension schemes is being misinterpreted and employers are calling for clarification.

The debate has been stoked by rec-ent Liberal Democrat calls for the Government to scrap the “obligation for employers to provide financial advice”for stakeholder.

Opra chief executive Caroline Instance says: “Employers should tell their employees this is the designated stakeholder and pass on details of the scheme. Employees can then choose whether to join.

“Employers should not say employees should have a stakeholder and should not give advice as they are not trained for it.”

But LibDem trade and industry spokesman Vincent Cable says employees are relying on employers not just to administer stakeholder pensions but also to provide a range of options, effectively offering financial advice. He says: “If employers are doing all the background work, then the implication is they will be providing a selection of pension options.”

Industry bodies are concerned that employers could suffer a backlash from disgruntled employees unhappy with the performance of the chosen pension plan.

Federation of Small Businesses deputy head of press and Parliamentary affairs David Hands says: “Pensions are a complex business and employers will have to set down and propose a scheme agreed by employees. If the scheme does notwork as well as it might, the employees will criticise the employer for not choosing the best scheme.”

Rather than putting the onus on employers to provide stakeholder options, the Institute of Directors believe it should be down to the employee to arrange their own pension provision. Deputy head of policy unit Richard Baron says: “The idea of stakeholder is great as it encourages people to get pensions but employers should not have to get involved with pension provision if they choose not to.”

A major concern is that employers have too much paperwork already to be able to effectively deal with stakeholder.

Opra is advising employers not to sign up to a pension until April 2001 – the time when the full range will be available. However, David Franklin chairman David Franklin – whose air freshener manufacturing company employs 11 people – believes companies are aware but are postponing making any decision until the next general election has taken place. He believes the election could mean changes to the stakeholder legislation and it would be “foolish” to make plans until then.

He says: “We are looking at stakeholder pensions but we will not bite the bullet until after the election when we will find out what really will go ahead. It is a complicated scheme and I think anyone making a decision now is foolhardy.”

The idea the Government&#39s plans for stakeholder are still subject to change has been emphasised by the exclusion from the scheme of employers with fewer than five employees. Although industry bodies welcome this exemption, not all of them believe the Government is doing enough. Baron says: “The exemption is good but not good enough. We want the obligation to be scraped altogether but at least this shows the Government has budged and might budge a bit further.”

The complicated stakeholder legislation could also confuse employers. Confederation of British Industry policy adviser Mark Thomas says focusing on each individual regulatory impact should be easy for employers to grasp but the idea of companies dealing with all aspects at once is worrying.

The CBI wants to ensure the legislation is implemented with a light touch to reduce the burden. Thomas says: “It will take time for employers to get used to the new system. It will be a steep learning curve and we look to Opra to take this into account.

“Opra can be quite rigorous in the way it inflicts deadlines for contributions but I would hope it will allow for the fact that employers will need time to learn as it would be counter-productive to clamp down on people in the initial stages.”

Opra agrees it needs to approach stakeholder carefully and says its first priorityis to ensure employers fully understandthe designation process. Instance says the intention is to educate first and then follow up on complaints. Guidance will be avail-able to employers needing help but repeat offenders will face punishment.


Skipton brings in semi-flexible mortgage

Skipton Building Society has brought in the flexible two-year fixed rate mortgage.Although the mortgage has interest calculated daily and gives the ability to overpay and take payment holidays, it does not include underpayments and lump sum withdrawals, unlike other flexible mortgages.The mortgage offers a number of different fixed interest rates, depending on which option the […]

Mini insurance Isa for healthcare workers

The Royal National Pension Fund for Nurses has set up an Isa exclusively for healthcare workers.Oneisa is an insurance-based with-profits mini Isa which allows savers to invest up to a £1,000 per tax year.The RNPFN says it has had 4,000 requests for application packs and expects that number to grow.This is the pension fund&#39s first […]

A botched pot never boils

I am approaching retirement at age 60 with substantial amounts in pension funds accumulated over the last25 years.Only a few yearsago, it seemed an adequate income wouldbe available from conventional annuities butI have read alarmingstories of falling returns and the risks associated with alternatives such as unit-linked and drawdown annuities. What should I do to […]


A nightmare on Endowment St

The bad dream continues for life offices as the endowments crisis shows no signs of letting up. Life offices simply cannot seem to shake themselves awake from the endowment nightmare. The bad dream is set to continue as Money Marketing recently revealed that 40 per cent of the 10 million letters going out to consumers […]

Why prevention is better than cure

Quoting the famous adage, prevention is better than cure; there are many proactive benefits that can improve wellness in the workplace, decrease stress, increase staff morale and reduce absenteeism, as well as attracting and retaining employees of a higher standard. With a recent study showing that employees in Britain are working below peak productivity, preventative benefits can ensure you address potential health issues or causes of stress at their source and ensure productivity in the workplace remains at an optimum level. With this in mind, how are you using preventative benefits to help keep your workforce happy and healthy?


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm