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Stakeholder Pension - Is my employer being underhand?

I was wondering if someone can clear up some concerns I have?

I work for a small family-run business (14 employees) which last year introduced a 'company' pension scheme.

We were informed that the company would contribute a percentage, with each employee free to add their own contributions directly from their salary. The company awards staff a pay increase each year in line with inflation (CPI rather than RPI). This year's increase was not passed on to us in our salary, but instead diverted directly to a stakeholder pension scheme with Scottish Widows. Keen to invest for the future, I also contributed around £150 pcm.

The company has just announced that they will repeat the exercise again this year, with our inflation-related increase being diverted directly to the pension scheme, rather than to our salary. Having not seen an increase in my take home pay since 2006 I questioned why it couldn't be added to my salary and was told quite bluntly that I had to 'like it or lump it'.

My question is this: why is my company so keen to re-direct my pay to a pension scheme? They assure me that it is in my own interests, but their refusal to compromise leads me to suspect otherwise. Is there anything I can do to release the monies they have contributed? Am I within my rights to cancel the scheme? I appreciate that I could just cancel my own contribution but I am loathe to miss out on the tax savings my contributions bring.

I have no doubt the company is serving its own purposes, I just don't know what the incentive is?

Thank you to anyone who can offer an insight.

Comments

  • I have no doubt the company is serving its own purposes, I just don't know what the incentive is?

    Well if it's being contributed from your gross pay (c.f. salary sacrifice,) then they won't be paying NI on it.

    Perhaps you could suggest to your company that since they aren't paying NI on that portion, then they could add that to your pension fund aswell.
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
  • dunstonh
    dunstonh Posts: 118,550 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    In addtion to Pauls comments, your company could be preparing for the introduction of the NPSS in 2012. They either have to contribute to your personal account or they have to match contributions into a personal/stakeholder pension arrangement or occupational pension scheme.

    So, over the 5 years, they could be building up gradually to that level rather than taking the hit all in one year.
    Is there anything I can do to release the monies they have contributed?

    No.
    Am I within my rights to cancel the scheme?

    Yes you can ask the employer to cease their contributions and there are under no obligation to pay them to you by other means.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • dunstonh wrote:
    there are under no obligation to pay them to you by other means.
    If it's being touted as "a pay rise" rather than "increased contributions" (as I read it from the OP) is that really the case?
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
  • dunstonh
    dunstonh Posts: 118,550 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Wording is key but there is no indication if it has been documented as an employee benefit or an increase in pensionable pay.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Andy_L
    Andy_L Posts: 12,958 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    IThe company awards staff a pay increase each year in line with inflation (CPI rather than RPI).

    Is that just custom & practise or is it contractually guaranteed?
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