The plan

What exactly is a stakeholder plan?

A stakeholder plan must be a defined contribution (money purchase) scheme. Its annual charges must not be more than 1 per cent of the value of the fund. The minimum contribution cannot be set at more than £20. The scheme must have its own trustees or stakeholder managers.

What do employers have to do?

By October 2001 employers must:

– Consult with relevant employees and designate a stakeholder scheme.

– Provide employees and organisations representing them with information about the scheme.

– Provide details of the scheme provider.

– Offer payroll deductions from an employee's earnings.

– Maintain records of these deductions and payments to the scheme.

Which employers are exempt?

You do not have to provide a stakeholder scheme if you have fewer than five employees, you already offer a compliant pension and will extend it to cover all those above the age of 18, or all your employees earn less than the national insurance low earnings limit.