Now that I have set up a stakeholder pension for all the employees in my company, is there anything else I need to do?
You are right to ask this question and it is an area that is causing concern with many of my clients.
The hiatus of last year when the Government introduced the new stakeholder pension legislation has passed but there are several areas where we have to be particularly vigilant.
There are three sections within your stakeholder pension – two where the company pays a contribution and a third where there is no contribution. You have already defined the eligibility for these three sections and it is imperative that everyone involved with employment and human resources is made aware of the eligibility conditions.
All too often, I find that an employee is offered membership in the wrong category of a pension scheme. If this is confirmed in an offer of employment, it can be not only embarrassing but expensive.
Your stakeholder pension is a group personal pension. As such, as we have not sought any form of exemption. All new employees will have to be informed about the stakeholder pension and offered membership of the appropriate category.
There are a few obscure areas where an employee need not be offered membership but I would take the general view, particularly from a management point of view, that any individual who is an employee of your company, on whatever form of contract, should be provided with details of the stakeholder pension and offered membership once they have worked for you for three months.
I believe that you should go a step further and obtain a signature from the employee confirming that they have received a stakeholder information pack and they are aware that they have access to further advice if required.
You have operating sites throughout the UK and the Channel Isles. Your employees in the Channel Isles are paid through the UK company payroll and, again, should be included in the stakeholder arrangement. From a management point of view, again, I would suggest that you put in place some form of procedure whereby anybody offered employment through any of your businesses in the UK is provided with details of the stakeholder pension from the outset.
The Occupational Pensions Regulatory Authority has been given responsibility for overseeing the payment of contributions. If a contribution due to be received by the provider is not received by the 19th of the month following the month of the deduction from pay, it has a responsibility to set a predetermined process in place which includes notifying the member direct and reporting the missing contribution to Opra.
Apart from the trauma caused by the insurance company writing direct to your employees at their home about missed contributions, Opra can, and will, fine you for late payments. There are other issues, mainly related to good practise, that you might like to consider. Your scheme has a default investment fund. I believe it is prudent that we regularly discuss and minute the discussion about its performance and suitability.
It is not only late or missed contributions that can cause problems. Normal annual returns can take time and result in Opra's involvement. I would suggest a meeting two months before the scheme renewal to ensure that you are fully prepared to deal with the collation of the required data.
When members leave, you must inform the insurance company immediately. If all you do is stop paying, this will prompt the non-payment procedures to start.
Today, all we have to do is ensure that everyone entitled to stakeholder is made aware of the opportunity and, for those who join stakeholder, contributions are paid to the provider in a correct manner in the required timescale. Good housekeeping should take care of anything else.