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Frequently asked questions

Do I need to provide access to a pension scheme for my employees?

Since October 2001, a business with five or more employees is required by law to provide access to a stakeholder pension scheme, unless it is exempt. This does not mean you have to provide a contribution to your employees’ stakeholder pension, but that you can.
Find out more about the law and whether your business is exempt

Your business is not legally required to provide an occupational pension scheme or a group personal pension arrangement. These are voluntary pension arrangements that you can put in place to provide retirement and death benefits for your employees and their dependants.

However, many employers say that providing a good pension can help recruit and retain staff. It shows that you value your employees and it can have tax and national insurance advantages for you as an employer.
Find out more about different pension schemes for your employees

What do I need to do to arrange access to some form of pension scheme for my employees?

The first step is to decide what sort of scheme you want to offer. Stakeholder and group personal pensions are run by pension providers whereas occupational pensions are set up by an employer.
Find out more about these pension options

Remember, if your business has at least five employees, you must offer access to a stakeholder pension scheme for all of your staff by law (unless you are exempt).

Next you need to think about how much your business can afford to pay into the scheme. If your business can’t afford to contribute to your employees’ pensions, your best option may be a stakeholder pension. However, we would encourage you to get appropriate information and advice before deciding what type of pension provision you will make available.

If you opt for a stakeholder pension scheme, you will need to choose a registered provider. The Pensions Regulator maintains a register of all stakeholder schemes.
Find out more about stakeholder pensions schemes on the Pensions Regulator website
Find out more about this and other requirements in our guide

If you decide to offer an occupational pension, consider whether you can set up and run a scheme in-house or whether you would be better outsourcing to a specialist. Again, we would encourage you to get more information and advice to help you make this decision.The Pensions Regulator can provide technical guidance to help you set up an occupational pension scheme.
Find out more on the Pensions Regulator website
Find out more about occupational pensions on the Business Link website
Find out more about occupational pensions from the HM Revenue and Customs website

What is a combined pension forecast?

A combined pension forecast allows your employee to see a forecast of both their state and current private pension provision together. It combines details of the current State Pension that your employee has built up and a projected State Pension up to State Pension age. We provide you with this information free of charge for you to include in the pension statements that you send out to your employees.

The forecast does not guarantee an employee will receive any particular amounts on retirement. An employee does see a snapshot of what their pension entitlements on retirement are likely to look like, based on current information. The purpose is to help your employee make reasonable and informed decisions when planning for their future.

Find out more about combined pension forecasts by registering your interest through our online form.

Or you can call a Customer Account Manager on 0870 010 1684, Monday to Friday, 9am to 5pm.
You can also read or print one a combined pension forecasting guides from our Resource centre

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What is the Government doing to help employers?

The Government recognises the crucial role that employers play in the pension system and has introduced reforms to:

  • Make the system simpler for you as employers: Proposals in the Finance Bill 2006, for example, simplify the pensions tax system by removing over 350 pages of complex legislation and nearly 1000 pages of guidance.
  • Make the system more flexible for you as employers: New funding requirements give trustees freedom and flexibility to develop more effective funding strategies.
  • Make it easier for you to tell your employees about their pensions: Changes to the Financial Service and Market Act (FSMA) means that if you make a contribution to a stakeholder or group personal pension, you will be able to tell your staff about the schemes.
  • Help your employees understand the value of employer contributions: We are raising awareness of the value of employers’ pension contributions along with the recruitment and retention benefits.
  • Provide several billions in tax relief to pensions every year: Find out more about the tax relief the Government offers to employers with pensions.

Find out more about pension scheme tax relief from the HM Revenue and Customs website

What is the Pensions Commission?

The Pensions Commission was set up by the Government to look at the long-term trends in pensions savings and whether there is a need to move beyond the current voluntary system.

The Pensions Commission released an initial baseline report in October 2004 analyzing the private pension system at that stage. It set out four main options for action.

The Commission made more detailed recommendations in its second report, released on 30 November 2005.
Read or print the Pensions Commission first and second reports or summaries of either

What is the Employer Task Force on Pensions?

The Employer Task Force on Pensions was set up by the Government to draw on business experience and innovation, identifying and promoting good practice in pension provision.

The Employer Task Force report, published in December 2004, confirmed that employers have a key role to play in pension provision. The Task Force has also published a good practice guide and Pensions Communications, realising the value, produced jointly with the Chartered Institute of Personnel and Development.
Read or print copies of the Employer Task Force publications from their website

Following a Task Force recommendation, the Government developed a website for employers with good practice examples and guidelines on pensions.
Find some useful tips and real life good practice examples for tackling pensions on the Pensions at Work website

What is the Pension Protection Fund?

The Pension Protection Fund (PPF) protects members of defined benefit schemes and the defined benefit element of hybrid schemes by paying compensation if their employer becomes insolvent and the pension scheme is underfunded.

Broadly, the PPF delivers a 100% level of compensation to members over normal pension age and 90% level of compensation to members under pension age, subject to an overall cap.

To have sufficient funds to pay compensation, the PPF charges a compulsory annual levy on all eligible schemes and takes in the remaining assets of any insolvent company’s scheme that enters the Fund. The PPF recently completed a consultation process on the levy structure and will publish the results, along with an estimate of the 2006/2007 levy amount, in the next few weeks.
Find out more on the Pension Protection Fund website

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What is the Financial Assistance Scheme?

The Financial Assistance Scheme (FAS) offers financial help to some people who have lost out on their pensions because their occupational pension scheme was under funded when it started to wind up, and their employer has been unable to make up the shortfall because it is insolvent or no longer exists.

FAS has been extended so that it will now help an estimated 125,000 people who lost out. People with losses will be topped up to 80 per cent of their core expected pension. This means a commitment of £8bn in cash terms over the scheme’s lifetime [£1.9bn in net present value].

Find out more about the Financial Assistance Scheme on the Department for Work and Pensions website

Where do I go to find out more about pensions?

There are several websites with more information on pensions.

Business Link is a government website offering practical advice for business on a range of topics including pensions.
Find our more on the Business Link website

HM Revenue and Customs has information about pensions and tax and national insurance.
Find out how you can file a pension scheme return online on the HM Revenue and Customs website
Find out more about stakeholder pensions on the HM Revenue and Customs website

The Pensions at Work website has good practice guidance and case studies on how to set up and operate a pension scheme.
Find out more on the Pensions at Work website

The Pensions Regulator has information on the regulatory framework for pensions and guidance for employers on their obligations. It also holds the register of all stakeholder pension schemes.
Find out more on the Pensions Regulator website

Where can I get more information on pension schemes for my employees?

The Department for Work and Pensions website has information for individuals on where to find information on common questions about pensions.
Find out more on the Department for Work and Pensions website

The Financial Services Authority is the government body established to regulate and provide information on pension products.
Find out more on the Financial Services Authority website

The Pensions Advisory Service is an independent, non-profit organisation providing information and guidance on pensions. It also offers help to members of the public who have a problem, complaint or dispute with their occupational or private pension arrangements.
Find out more on the Pensions Advisory Service website

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