The government has announced decisions on a number
of key aspects in relation to stakeholder schemes, including the
following:
Charges: a maximum annual charge of 1% of the value
of the fund to cover operating costs. There will not be a
requirement on schemes to offer individual financial advice within
the 1% charge (although some schemes may choose to do so) and it
will be open to schemes to charge an additional fee for individual
advice if they wish.
Contributions: To encourage small savers and to
allow small one-off contributions, schemes will not be able to
insist on a minimum level of contribution any higher than GBP20 and
will not be able to require members to contribute with any specific
frequency e.g. every week, or every month. The minimum has been
increased from the original proposal of GBP10.
Advice: schemes must provide basic information and
explanatory material but will not be required to offer individual
financial advice within the 1% charge. Schemes may provide advice
within the charge limit if they wish, or charge a separate fee.
Access: the requirement to provide access to
stakeholder schemes will be restricted to employers with five staff
or more.
Group personal pensions: Employers who arrange
group personal pensions will also be exempt from the access
requirement, provided they offer a contribution of at least 3% of
earnings. Both exemptions will be reviewed after three years.
Trustees: schemes will have the option of being set
up either with a board of trustees, or by an authorised scheme
manager.
The draft regulations for stakeholder pensions will
be issued for consultation in early 2000, prior to the regulations
being laid by around Easter. Legislation for the tax arrangements
will be incorporated in the Finance Bill 2000 and in regulations
made under that and existing Inland Revenue legislation. Draft
Finance Bill clauses and tax regulations will be issued in early
2000.
The full text of the press release is available at
http://www.dss.gov.uk/hq/press/2000/jan2000/00001.htm
For information on any pensions issues, please
contact Nigel Moore on 0171 367 3405 or e-mail ncm@cms-cmck.com