Firms resigned to stakeholder fines

One-third of small companies are more prepared to pay a £50,000 fine than introduce a stakeholder pension scheme for their employees when it becomes obligatory in October, a survey published today suggests.

One-third of small companies are more prepared to pay a £50,000 fine than introduce a stakeholder pension scheme for their employees when it becomes obligatory in October, a survey published today suggests.

Some 63 per cent of businesses that took part in research conducted by Prudential did not even realise that the new low-cost pensions launch in April.

When told that companies with five employees or more and no current pension provision would have to offer stakeholder pensions from October, 31 per cent said they did not intend to offer one.

This would lead to a fine by the Government unless the firms came up with an alternative company scheme with terms at least as good as those of stakeholder pensions.

Sean Tompkins, marketing director of Prudential, said: "Companies have the perception that introducing a stakeholder pension involves a lot of red tape but actually it is straightforward."

Separately, the stakeholder pensions launch came under fire from the Conservative Party yesterday, which said glitches in the official pensions computer system threatened to undermine the scheme from the outset. The system, which calculates and distributes National Insurance rebates to those who contract out of the state earnings related pension (SERPs), has in some cases been responsible for erroneous pension payments.

David Willetts, shadow social security secretary, said: "The scale of the problem poses a real threat to the take-up of stakeholder pensions. If the Government cannot guarantee accurate and punctual rebates, it will find it impossible to sell stakeholder pensions."

Stakeholders will be particularly affected by the glitches, Mr Willetts said, because their target audience of people on modest incomes will rely heavily on National Insurance rebates to fund their pensions and will probably not have substantial amounts of additional cash to plough into their pension.

Jeff Rooker, the pensions minister, said last year that officials were working to ensure computer problems did not hit stakeholders.