Stakeholder pension schemes could prove to be a burden when they are forced upon UK companies in October, according to senior consultant at Watson Wyatt Andrew Cheseldine.
Cheseldine explained that stakeholder schemes could limit the flexibility of existing company pension arrangements. “The major impact is that two pension schemes within one company will not be able to cross fund and this would reduce fund flexibility,” he said.
Cheseldine added that there are other compliance issues that would turn companies with defined benefit (DB) schemes away from the stakeholder route.
“It will not prove compatible for companies with DB schemes but there could be a considerable take-up among the smaller companies,” he said.
Cheseldine added that companies with large payroll systems are expected to turn shy of stakeholder schemes, especially where low-income employees are concerned.
by Janet Du Chenne
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