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 with effect from 1 October 2012.

The following transitional provisions will apply:

  • An employer can continue to deduct contributions from the salary of an employee who is an existing member of a stakeholder scheme.
  • 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.

Given that the repeal of the stakeholder requirements has not been aligned with the Department for Work and Pension's staging timetable for the new auto-enrolment duties, the effect is that some employers could get away without providing employees with access to a pension scheme until it becomes subject to the duty to auto-enrol its eligible jobholders (potentially not until 2018).

Employers will need to consider their policy with regard to existing and new employees between now and 2018 when the new auto-enrolment rules are expected to come into force.