How many staff do you employ – six, seven, eight maybe? According to our annual PAYEpeople forecourt wages report (Forecourt Trader, Oct 05) the ‘average’ petrol retail site in the UK employs 8.2 hourly-paid staff. We know that many operators run two or three sites but it’s now becoming commonplace for one retailer to be responsible for five, six or even more sites. So it’s not unheard of for a site operator to be responsible for 30 employees, in fact it may soon be the norm. However as far as the Welfare Reform & Pensions Act 1999 is concerned, the number of staff you employ before you fall under the scrutiny of the Department of Work and Pensions is much lower than that. Five – to be precise. No, that wasn’t a misprint. If you employ five or more staff then you need to ensure that you have complied with the regulations regarding Stakeholder Pensions.
The Stakeholder Pensions legislation came into force in 2001 and now the relevant authorities are beginning to crack down on those who’ve not complied – be warned, the penalties can be severe.
The Stakeholder Pension regulations were intended to bring an inexpensive method of pension-saving to the lower-paid employees who had been ignored by the pension industry, and who worked for small employers, who didn’t provide an occupational pension scheme for their employees. That describes the typical petrol station quite well and staff working for singleton operators who were not used to any form of pension provision beyond the ordinary ‘state pension’. Hence the 1999 legislation brought many more ‘small’ employers into the net as far as pension provision was concerned, and gave them a couple of years to put arrangements for their staff in place.
The regulations say that if you employ five or more staff then you must give those staff access to a recognised Stakeholder Pension scheme – unless you already offer an occupational pension scheme that all your staff can join within a year of starting work for you.
The Stakeholder Pension regulations themselves do not require you, as an employer, to make direct contributions into a Stakeholder Pension for your employees, but you are responsible for:
- selecting a registered scheme;
- consulting with staff about the choice of scheme;
- formally entering the scheme;
- giving your employees information about the scheme and deduction arrangements;
- making the deductions and ensuring that they are paid over within the time specified limits;
- recording the payments made to the stakeholder scheme provider.
If, when consulting with your employees, you find that some of them do not wish to join the scheme at that time, you must still offer them access so that they and any new employees can join at a later date.
There are various conditions and exemptions specified in the legislation, although this is not the place to explore those in any detail. We have heard stories of employers trying to use these ‘exemptions’ to avoid having anything more to do with the Stakeholder Pension, but the simple fact remains that the regulations were meant to apply to just the sort of employment set-up that is common in this industry. In other words, if you really believe that your business is ‘exempt’ from having to provide a Stakeholder Pension, you will still have to jump through various hoops to establish evidence of that ‘fact’ for when OPRA (the Occupational Pensions Regulatory Authority) comes to call – employers found to be deliberately evading their responsibilities under the legislation can be fined up to £50,000.
The bottom line is that if you are a petrol retailer employing staff at one or more sites, then you almost certainly fall within the scope of the Stakeholder Pension regulations – it would be quite the exception if you didn’t – and hence you are at considerable risk if you haven’t yet come to terms with the regulations. There is advice available from various government agencies – (HMRC, for example, run an Employers Helpline on 08457 143 143) – however we would recommend that you also seek advice from your accountant and/or independent financial advisor if you’re in any doubt as to whether you are fully compliant with the regulations.