Stakeholder Pensions

Stakeholder pensions have now been in place in the UK for a couple of years and as is the case with all rushed legislation they are proving to be unlikely to work as had been planned as they will not satisfy the UK pension gap.

Although akin to a 401k plan there are differences which are more than subtle but pension contributions are mandatory for employers. The auto enrolment process as it’s known allows for employees to opt out of the pension plan if they elect and across our client base the take up tends to be about 1 in 3 employees as of July 2018, in fact this take up rate is decreasing as the mandatory percentage contributions increase at the start of each tax year and are rising again in 2019. The decrease in employees electing to take up a pension plan is a direct consequence of the matching that employees have to make with the employer contribution.

Employer pension contributions are however far more important than an exercise in compliance, the value in considering a pension or any benefits plan to employees is from the standpoint of recruitment and retention. In the technology sector for example there are certainly salary levels where an employer pension contribution is very much required as part of a competitive offer.


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