Stakeholder Pensions: OPRA Targets Defaulters - Employment Law News Summer 2004

01 July 2004

The introduction in October 2001 of stakeholder pension requirements, potentially affecting any organisation with five or more employees, saw an initial surge of scheme set-ups. However, it is plain that many employers have ignored the regulations. This is despite the ability of OPRA (the Occupational Pensions Regulatory Authority) to impose fines of up to £50,000.

The good news is that OPRA would seemingly sooner engage employers in conciliatory fashion, highlighting the rules and extolling the benefits of operating a pension scheme, than wave the big stick. But it does now seem prepared to adopt the tougher approach where necessary, having recently imposed its first fine, of £10,000, on a company failing to provide its employees with a stakeholder scheme.

Stakeholder is a significant part of the Government's pensions initiative. It seems unlikely that employers who continue to ignore the rules will be treated with kid gloves for long.

Stakeholder scheme establishment is of course to be distinguished from employee participation. In a startling statistic, one major provider of these arrangements says that, of the schemes it has set up, more than 90% have to date received no contributions at all, whether from employer or employee. Could this apparent failure of stakeholder to bridge the savings gap lead to compulsory company contributions in the future?

For more information please contact Simon Ludden, Financial Planning Manager.
 

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