Know your legal obligations on pensions

Must I provide a stakeholder pension?

You may have to provide your employees with access to a stakeholder pension if you have five or more employees.

From the date you employ your fifth employee you have three months to choose a stakeholder pension scheme, inform your employees and offer them access to it.

You are exempt from the requirement to provide workplace access if you:

• employ fewer than five people
• offer an occupational pension scheme that all staff can join within a year of starting work for you
• offer all your employees access to a personal pension scheme

For you to be exempt from the requirement to provide access to a stakeholder pension, the personal pension scheme you offer must meet certain conditions. The scheme must be available to all employees who would otherwise have access to a stakeholder pension scheme (except those under 18). Your contributions must be at least 3 per cent of the basic pay of each employee who joins, and it must be possible for them to have their deductions made through their pay.

The scheme should have no penalties for stopping contributions or for transfers. If you offer an occupational scheme for some and a personal scheme for the others, the schemes must meet the conditions set out here.

You do not have to provide access to a stakeholder pension scheme for employees who:

• have been in continuous employment with you for less than three months
• are members of your occupational pension scheme
• can join an occupational scheme within 12 months of starting work with you
• earn less than the National Insurance lower earnings limit
• could have joined your occupational pension scheme but decided not to
• cannot join an occupational scheme because they are under 18 or are within five years of the normal pensionable age
• are ineligible to make a contribution because of a restriction placed on them by HM Revenue & Customs

Find out if you have to offer a stakeholder pension using the decision tree at the pensions regulator website.

You do not have to make contributions to your employees' stakeholder pension. They are not obliged to make contributions either.

You can read guides to stakeholder pensions for employers on the Pension Service website.

Subjects covered in this guide

• Introduction
• Occupational pensions
• Personal pensions
• Stakeholder pensions
• Contracting out of the State Second Pension and paying Additional Voluntary Contributions
• Must I provide a stakeholder pension?
• Providing a stakeholder pension - key steps

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