Pensions - Employee pay and benefits

We would advise all employers to provide a pension scheme for their employees. Indeed there is a requirement for companies to provide employees with access to a stakeholder pension scheme (see link opposite). In our view the best starting point for employers is to approach an independent financial advisor on the basis of paying a fee for advice and any commission payments being returned to the organisation. See link opposite for access to independent financial advisors.

From 1 April 2006 employers will be required to consult employees if they propose to change their pension scheme. Consultation should take place on changes such as:

an increase in the normal retirement age;
replacing a defined benefit scheme with a money-purchase arrangement;
closing the scheme to new or existing members
removing liability to make employer contributions;
changing the future basis for scheme accrual;
increasing member contributions.

Where trade unions represent the Scheme members they should be consulted. Otherwise employee representatives should be elected or consultation should take place with individual members. A period of at least 60 days should be allowed for consultation to take place.

Employers are well advised to begin consultation well in advance of any decision being taken. Written information on the proposed changes should be provided so that members or their representatives can clearly understand the impact of the changes. There is no specific requirement to consult with a 'view to agreement', but employers must be able to display a genuine attempt to consult on the proposals. This means get an informed view from employees and listen to their representations.