The Government could collect as much as £2.5bn from UK companies that miss the 8 October deadline for setting up stakeholder pension schemes, according to new research released today.
Virgin Direct, the pensions, investment and life insurance arm of Sir Richard Branson's business group, estimates that as many as 50,000 companies could be late, leaving them liable to a fine by pension regulators of up to £50,000.
By law, all companies employing five or more staff, where there is not already a qualifying workplace pension scheme, have to set up a stakeholder scheme by 8 October. Employers must select a company to be the scheme's provider and inform their employees about the chosen plan.
They also have to arrange for contributions to be deducted automatically from the employees' pay, as well as keeping records of payments made into the scheme. Employers do not, however, have to contribute.
Virgin claims only 11 per cent of eligible businesses are aware of the stakeholder requirements or plan to leave it to the last minute and so could miss the deadline. Virgin's research shows that 458,480 firms, 88 per cent, are aware of the October deadline, while 11 per cent (50,270 firms) plan to leave stakeholder as late as possible.
Two-thirds of firms have yet to consult staff over the choice of stakeholder schemes, and 52 per cent have only got as far as requesting literature.
Of those that have taken positive action, 41 per cent have had an initial meeting with a pension company. Slightly more, 42 per cent (191,940), have set up a scheme, and nearly all plan to make contributions to staff pensions, usually 5 per cent of a salary.
Understandably, the least ready for stakeholder pensions are small to medium-sized companies. The bulk of those intending to put implementation off as late as possible – 49,720 – fall into this category, employing between five and 10 staff. But of the firms of this size, 65,540 firms have a scheme already set up.
Gordon Maw, Virgin Direct's marketing manager, said: "The clock is ticking now for employers and our research shows there is a hard core who intend to leave it all to the last minute, particularly in the small-business sector. Unfortunately, they may find it difficult to get a scheme set up in time and could get clobbered with a hefty fine.
"Employers need to remember they're legally required to consult staff on choosing a pension scheme before picking their pension provider and there's now only two months in which to get all that organised."Reuse content