Is this 'fair'

Milarky

The statekholder pension regulations and the social security act 1999 set out the employer's obligations to 'facilitate access' and make payroll deductions from new employees.

There seems to be a slight 'catch 22' written into the rules however.

To get the employer to make deductions (and let's assume they offer to match contributions taken by payroll to give this some context) you first have to be a member of the employer's own designated stakeholder pension scheme. So, how do you get to be a member? The employer tells you about the scheme and you then apply to them.

Under the rules the employer could 'designate' any number of schemes if they are stakeholder compliant - and that could include one you already belong to. But of course being a watered down obligation they aren't required to. Also they only have to 'consult' (meaning 'inform' in practice) once when they first choose a scheme. Any employee not originally consulted - tough!

And they don't even have to comply with a request for payroll deductions even if you join their chosen scheme for 3 months after starting a job.

I raise this because having recently been a member of a workplace stakeholder scheme with matching employer contribution my joining didn't go smoothly and the chance to start matching contributions was delayed several months. Had I known how they played the game I could have made a pre-emptive application to their provider and an instant written request (to the employer) for payroll deductions to begin quoting my membership.

I suppose that once in a blue moon new employees may actually find they already have a stakeholder (perhaps from a previous job) with the 'designated provider' of their new employer and cannot be required to join a second time (or can they? Is 'designation' unique to the employer or unique to the provider?)

These wishy-washy loopholes (buying time for the employer on the obligations front) can't be unintentional - they were inserted to water down the effective 'burden' on employers - not unlike the 'dumbing down' leveled at GCSEs - so that virtually any little outfit can meet the standard.

What I fear, is that the next initiative in this area - the 'personal accounts' (funny how they aren't called 'pensions' when that's what they are?) due after 2010 requiring every employer (virtually) to at least auto-enroll employees into membership of their designated provider will still probably give them 3 months to do this too - during which time employees can't benefit from a matched contribution. I suspect the govt won't use the opportunity to revisit workplace stakeholders by tightening the rules - but they should precisely because they set the bar too low in the first instance.

On a practical point. I understand that these 'so good, I can't believe it's a pension' personal accounts will be 'immiscible' since you can't 'transfer' SHPs into PAs. Why should auto-enrollment be a requirement to receive a matching employer contribution if you already have your own SHP? Why should workers be expected to hold any number of different PAs or or SHPs from different period of employment? Where's the choice in that? [Maybe the IFA answer is that there will be concentration - with only a handful of actual providers of PAs emerging?]

My preference would be a generalised right to 3 per cent minimum matching employer contribution into any scheme of your choosing. But I suspect that would be too administrative ..

(Oh well!)