If you earn more than the National Insurance lower earnings limit (£157 per week in tax year 2017-18) and if there are five or more employees where you work, your employer is normally required to offer you the chance to join a company pension scheme. They must provide access to a stakeholder pension unless they offer either an occupational or another alternative suitable pension scheme.
Stakeholder pensions must offer low minimum payments where you only have to contribute as little as £20. They must also provide the flexibility for you to only pay into the scheme when it suits you and the amount the pension provider can charge you in annual management fees must be capped (restricted).
If your employer is obliged to offer you a stakeholder pension, you must be able to pay into it directly from your wages through the company’s pay system. Your employer is not obliged to pay anything into the scheme themselves or to pay any administration charges imposed by your pension provider.
Alternative Pension Arrangements You May be Offered
If your employer offers you an alternative pension provision to the stakeholder pension, its terms must meet the minimum standards as set out by the Government. Your employer is obliged to contribute the equivalent of at least 3% of your salary if they are offering this as an alternative to a stakeholder pension. However, they do not have to pay anything towards administering the scheme.
If you leave your employer, or transfer money out of the pension scheme and into another scheme, you don’t lose the money your employer has contributed.
Group Personal Pensions
Your employer may arrange for a pension provider to set up a personal pension arrangement through the workplace. Personal pension schemes of this type are known as ‘Group Personal Pensions’ or GPP.
There can be some advantages of joining a GPP arranged by your employer. Firstly, your employer will usually contribute to your pension and if it is offered as an alternative to a stakeholder pension, then they must contribute an amount equal to at least 3% of your basic salary. If your employer has made contributions and you subsequently leave the company, you do not lose any money they have contributed. They will also deduct the money from your pay and forward it on to the pension provider on your behalf. Because it is a group pension scheme, your employer may be able to negotiate better terms than you would get as an individual, e.g. a reduction in administrative costs. There is often more flexibility with you being able to maintain contributions to your pension scheme if you change employers.
Complaints About Your Pension Scheme
If you have a personal pension scheme, the company which sold it to you should have procedures in place should you wish to make a complaint. You should follow these procedures in the first instance by contacting the pension provider who sold you the plan.
Similarly with company pension schemes – a formal complaints procedure is required by law.
If you are still not satisfied with how your complaint is dealt with, you can take it up with the Pensions Advisory Service. Their network of voluntary pension professionals help anybody with a complaint or dispute with their pension arrangement and the service is free.
If they believe you have a case to take to the next stage, you will be referred on to the Pensions Ombudsman or the Financial Ombudsman Service. An ombudsman is an independent official who investigates and resolves complaints. Their services are free and their decisions are binding. The Pensions Ombudsman investigates complaints about the way in which pension schemes are run and are the people who would deal with badly run and mismanaged pension scheme complaints. The Financial Ombudsman Service investigates cases where people feel they have been mis-sold pension schemes. They are the people who would deal with complaints where a person feels the pension they were sold is not right for their circumstances or where a person wasn’t warned that the amount the pension would pay out is not guaranteed.
If your pension scheme administrators have broken the law or breached the rules governing their conduct, you can ask for them to be investigated by the regulator. For company pension schemes, this is the Pensions Regulator and for personal pensions, it’s the Financial Services Authority (FSA).
The Pension Protection Fund (PPF) can take responsibility for your company pension if the company becomes insolvent and the pension scheme doesn’t have enough money to pay your pension. However, the scheme must not have started winding up before 6 April 2005.
If your personal pension scheme is not being paid because a financial firm goes out of business and can’t pay money it owes you, or if you have lost money because you have been wrongly advised by an authorised financial adviser, you might be able to get compensation from the Financial Services Compensation Scheme (FSCS).