We understand that if an organisation employs five people or more (whether part time or full time) it is obliged to offer a Stakeholder type pension. But the employer is NOT obliged to make any contributions into it - not very helpful for employees - so they can set up a Group Personal Pension scheme with no contributions but still be legal.

However, we encourage all the businesses and voluntary organisations we encounter, however small they may be, to budget for employer contributions of at least 5% of gross salary and to encourage employees to contribute the same. Some offer an incentive up to a certain percentage. For instance the employer will match each employee contribution up to 10%, so if the employee elects to pay 7%, the employer will also pay 7%.

It is very important to build into all funding applications a budget which includes at least 5% and ideally 9% - 10% of gross salary for each employee, allowing for salary increases each year.

We believe that the voluntary sector should seek to replicate the basic benefits offered to employees in the public and local authority sectors. If employees are not receiving a combined contribution of at least 15% of gross salary into their pension, they are unlikely to achieve a reasonable level of pension at retirement. In reality, it is much more complicated than this - young people will benefit much more than older people from a flat level of contribution.

We have developed a simple table for small businesses to pay a higher percentage in as employees get older and combines an increase to reward those with longer service.

Remuneration for colleagues older than retirement age

It is difficult for small voluntary organisations to adequately reward employees who have not built up pension in previous years. You could consider making maximum lump sum contributions into pension for them while this will increase under the new pensions regime, it is budgetary rather than legal constraints that usually limit the amount a small voluntary organisation can contribute.