How to Designate a Stakeholder Provider

Once you have determined that you have to offer a Stakeholder scheme you will need to designate a Stakeholder provider.

Designation is the term used to describe the process where an employer formally selects a Stakeholder scheme and the employees are invited to join. There are 5 key areas that form part of designation:

  • Consult employees and relevant organisations - This must be done before you make your final decision and designate the scheme. You may wish to discuss the reasons for your choice, but ultimately the decision is yours.

  • Choose a Stakeholder scheme - Select a Stakeholder pension scheme which your employees are then invited to join. You are not required to investigate past or possible performance of the scheme.

  • Record your decision and provide basic information - It must be clear for your own benefit that you have complied with Stakeholder regulations and designated a scheme. This should be formally recorded, for example in a board resolution. In addition, your duty dictates that you should provide relevant employees and their representatives with information about the scheme.

  • Offer payroll deduction facilities - Once you have designated a scheme you are also required to offer the facility to deduct employee payments from their pay. However employees may choose to pay pensions contributions direct to the scheme provider.

  • Maintain records of employee deduction and payments - You will be required to keep up to date records of the amounts and dates of all payments made by you and your employees. This is then sent to the scheme provider, who monitors the arrangements. Payments paid to the scheme provider must be within 19 days of the end of the month in which the deduction was made, i.e. a deduction made in February must be paid by 19th March.

Some employers will need to provide ongoing information to employees to ensure that, when they have worked with you for three months, they are advised how to gain access to the scheme.