The Background

With Final Salary Pension Schemes in decline, the State Pension being delayed further and further into old age and an ever aging population, it was felt necessary to introduce an alternative to the altogether unsuccessful Stakeholder Pension.

Stakeholder was unsuccessful as employers were only required to provide their staff access to a pension scheme. There was no compulsion on the employer to make contributions and little incentive for staff to join.

Although Stakeholder was designed to be a compulsory requirement for employers, there is only record of one employer ever being prosecuted for non-compliance.

It would be a big mistake to think Auto-Enrolment is just another attempt at Stakeholder. Auto-Enrolment of staff into a Qualifying Workplace Pension Scheme is a legal employer duty and failure to adhere can result in criminal charges. Fixed penalty fines are the start with daily fines from £50-£10,000 for persistent breach of the rules. If an Employer thinks they can put a scheme in place and simply coerce or entice staff not to join, they would be breaking the law. The Regulator will be looking out for schemes with no members and investigating why.

Between 1^st October 2012 and 1^st April 2017 (later for new employers after April 2012) every other employer has to ensure they have a suitable scheme in place by a given date, called the “Staging Date”.