Abolition of requirement to provide access to a stakeholder pension scheme
With effect from 1 October, employers are no longer obliged to provide access to a stakeholder pension. This is to tie in with the introduction of auto-enrolment, but its abolition now means that many employees may not have any entitlement to pension provision at all until their employers reach their auto-enrolment staging date.
Employees who are already members of their employer's stakeholder scheme on 1 October 2012 must be able to continue with their arrangements if they have already had at least one regular pension contribution deducted. If an employee then asks the employer to stop deductions, the employer must inform them that it is no longer required to make deductions and pay them over to the scheme, but that the employee may make contributions to the scheme directly subject to scheme rules.
Upon reaching their staging date, employers can also continue with their existing designated stakeholder scheme if they want, provided it fulfils the criteria of a "qualifying schemes" for the purposes of auto enrolment.
In line with these changes, we have updated the pension provisions of the Vigil contract of employment (clause 10.1, 10.2 and 10.3). In particular, clause 10.1 is now set out as a clause which will be included whatever the employer's pension arrangements. Employers must ensure, however, that they give the employee the right scheme documentation, and it would be wise to keep a note on the employee's personnel file setting out what they were given. If there is no current contributory pension scheme in place for employees at that level (and the employee has not already contributed to a stakeholder scheme before 1 October 2012), the employee should be given information about auto-enrolment, making clear that this will not be available before the employer reaches its staging date. If an employee requests further information about auto-enrolment, employers should be careful to ensure that any information they give is accompanied by the caveat that the employer's auto-enrolment obligations are not contractual but are set by legislation and are subject to change. If you have any queries in this regard please contact your Vigil adviser in the first instance. (Depending on the nature of the query, it may be passed on to our Pensions team and, if so, will not fall within the scope of Vigil's day-to-day employment law advice).