Since the Stakeholder pension rules were introduced, employers with five or more qualifying employees must put in place a Stakeholder pension scheme. It is then up to employees whether or not to join. The rules became enforceable for employers on 1 October 2001 but, as expected by many, the take-up by employees has been poor.
The Association of Consulting Actuaries undertook research and their results showed that over 80% of all Stakeholder pension schemes put in place by employers were just empty shells.
Through research of our own, many of the pension schemes put into place by smaller employers were only as a result of the regulations with employers feeling forced into it. This does not help employers to positively promote the schemes to employees. On the other hand, employees know that their employers must offer them a Stakeholder pension. Again, our own research shows a reluctance from employees to join pension schemes, even when the employer is making a contribution on their behalf.
Pensions most definitely need an overhaul and people need to realise that unless they save for themselves, they are likely to retire in poverty. The Government is working on it but changes are likely to take time. The best advice we can give is to save only what you can afford on a long term basis - even if it is only £5 per week.
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