It is a legal obligation for employers to offer a new regime of retirement planning to employees. Stakeholder pensions were introduced on the 6th April 2001, designed by the Government in order to encourage more people to take responsibility for planning for their own future.

There is a legal responsibility to provide access to a stakeholder pension if you employ five or more employees (full and part time) and do not offer either an Occupational Pension Scheme or an 'exempt' Group Personal Pension Plan.

Unless an employer is exempt, by October 2001, you need to designate a stakeholder pension scheme to all relevant employees, or else could face a fine of up to £50,000 for a corporate body or £5,000 for an individual.

Stakeholder plans allow no initial charges or surrender penalties, flexible payments, portability between schemes and annual management charges of less than 1% per year. In essence, they are designed to be flexible and cost-effective.