UK Pensions Green Paper consultation: BECTU's response

25 March 1999

I write on behalf of BECTU. We have a large number of freelance and self-employed members and it is with their situation in mind that we wish to raise a number of specific points on the proposals for Stakeholder Pensions. On the broader issues raised in the Green Paper our views are in line with those of the TUC.

Right of Access via Employers

Many members working on a freelance fixed-term contract basis may typically work for a number of different employers in any given year. We would wish as many of them as possible to have the option of accessing stakeholder schemes on the same basis as staff i.e. that any eligibility threshold (in terms of status, service etc.) be drawn as inclusively as possible so as to given them the right to choose to join any given scheme. We recognise the potential problems caused by individuals becoming members of numerous different schemes and would not regard it as in our members' interests to do so. Some reasonable limits could therefore be drawn in terms of multiple scheme membership.

Direct Access to Stakeholder Pensions

In parallel to the option of access via employers, it will obviously be beneficial for freelances - which may have either employee or self-employed status (or even both within the same year) - to have the right of access directly to stakeholder schemes. We recognise that the Green Paper specifically proposes that the self-employed be allowed to join. What we seek further clarification on is whether scheme providers could still reject applications from freelances and the self-employed. Some of our members have experienced difficulties in the past owing to the fluctuating nature of their earnings, to varying tax status and to administrative difficulties on the part of providers. We believe it is essential that freelances and the self-employed be guaranteed direct access to stakeholder schemes at some level so that it should not be possible - through successive rejections by scheme providers - for any such individual to 'fall through the net'.

Transferable Employer Contributions

We would like some consideration to be given to transferable employer contributions. Individuals who work for a number of different employers may miss out on employer contributions - even though on every other criterion they should have been eligible - merely because their freelance status has effectively prevented them from joining a particular stakeholder scheme. If, however, the employer pension contribution could be transferred to other schemes, they could still take advantage of these benefits on the same basis as staff. We recognise that this may be primarily a collective bargaining issue but we would wish the legislative framework to allow for, if not encourage, transferable employer contributions.

Top-Ups

Given the fluctuating and unpredictable nature of freelance earnings, they may wish to provide, in good years, for a level of pension contribution in excess of the maximum permitted amount of £3,600. We assume that any such topping-up would have to be to separate personal pensions over and above a stakeholder scheme. Since freelances might wish to do this on a number of separate but unpredictable occasions, we would not wish them to be subject to separate start-up costs or extra administration charges each time they make a top-up payment. We would ask that consideration be given to allowing such top-ups without the disincentive of repeated and excessive charges by providers.

We hope you can give attention to the points we have raised. We would be happy to provide supplementary information on the freelance labour market if required. We look forward to the further progress of the pension reforms.