What Is A Qualifying Workplace Pension Scheme ?

20 Jan 2012

As an alternative to the new NEST pension, the rules allow for an employer to operate their own ‘qualifying pension scheme’.

However, we have found that employers are confused as to what constitutes a qualifying scheme.

For example, a Stakeholder pension scheme (remember in 2001 when some bright spark in Government thought it would be a good idea for employers to have one of these ?!) is not automatically a qualifying pension scheme. 

To start with, it must be a registered pension scheme. It must also be able to accept members by auto-enrolment, have a default contribution basis and a default investment option.   

Probably most importantly, it must receive a minimum level of contributions. However, this is not as straightforward as it seems as the contribution level is 8% of qualifying earnings, (currently between £5,715pa and £38,185pa -including overtime and bonuses), of which an employer must contribute at least 3%.

As an alternative, 9% can be paid of the total Basic Pay – avoiding the need to include variable amounts such as bonuses or overtime.

If you would like to discuss if your company scheme will qualify, or any other area of the workplace pension reforms, please contact us>>

Written by Clive Shaw | Chief Executive

Clive joined Mantle Financial Planning in 1991 & became Chief Executive in 2007 Read more >>

Posts by Clive Shaw (16)