What is a stakeholder pension scheme?

Stakeholder pensions were introduced under the Welfare Reform and Pensions Act 1999 and were designed for employees who did not have access to an occupational pension scheme. From 8 October 2001 to 30 September 2012, employers (other than those that were exempt) were required to designate stakeholder pension schemes and make them available to employees. From 1 October 2012, the legal requirement to designate a stakeholder pension scheme was removed by s.87 of the Pensions Act 2008, with the introduction of pensions auto-enrolment. Transitional arrangements allow relevant employees (ie those making regular contributions into a stakeholder pension on 1 October 2012) to retain the right to have their contributions deducted through the payroll and paid over to the scheme provider. If a relevant employee withdraws a request for their employer to make deductions into a stakeholder pension scheme, the employer must notify the employee that it is no longer required to make such deductions and that the employee may, subject to the scheme's rules, be able to make payments directly into the scheme.

Existing stakeholder schemes can be used for auto-enrolment purposes if they meet the necessary criteria to make them a qualifying scheme.