As you will be aware, with effect from 1 October 2012, auto enrolment legislation started to apply to employers (its effect being staged over the next 5 years depending on employer size).
As a side effect of this legislation the Pensions Act 2008 (PA 2008) has repealed the requirement for employers to designate a stakeholder pension.
As a result, the previous requirement on a UK employer employing five or more employees to designate and facilitate access to a stakeholder pension scheme has been abolished. However, transitional provisions allow an employer to continue deducting contributions from the salary of an employee who is an existing member of a stakeholder scheme after 1 October 2012. If an existing member asks his employer to stop the deductions, the employer must tell the employee that it is no longer required by law to deduct contributions and pay these to the scheme on his behalf, but that the employee can still make payments directly to the scheme, provided this is permitted by the scheme rules.
Oddly (given the entire point of auto enrolment is to encourage pension provision) the repeal of the stakeholder requirements has not been aligned with the DWP's staging timetable for the new auto-enrolment duties as they apply to individual employers.
Therefore, an employer will no longer be obliged to provide access to a pension scheme (unless already required under the contract of employment, the rules of an existing pension scheme or under TUPE) until the employer becomes subject to the duty to auto-enrol its eligible jobholders in accordance with its auto enrolment date. There is therefore the potential for a gap period where no pension provision is required by law (except under the three circumstances mentioned above). Consequently, there is no need to require stakeholder compliance in any contracts of employment.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
