Pensions developments are having an increasing impact on legal practice, but there is a concern that solicitors may be ill-prepared.A report last year (see 1999 Gazette, 3 February, 4) remarked on the 'worrying lack of awareness' of pensions matters on the part of partners in London law firms which had been revealed by research undertaken by Deloitte & Touche; and this related to partners' own pensions, for which self-interest might have been expected to prompt at least some concern.

Meanwhile, the imminence of pension-sharing on divorce poses an additional challenge for family lawyers, as the Financial Services Authority prepares to consult on guidelines for financial advisers providing pensions advice to divorcing couples.The area of pensions development of which every solicitor will need to be aware is the introduction of stakeholder schemes, with effect from April 2001.

This statement may seem surprising, given that the idea was conceived by the government as a low-cost form of self-provision for those earning between £9,000 and £18,500 a year who are not members of occupational pension schemes.

The fact is, however, that during the course of its evolution through the consultation process, the scheme has changed.Gone is the requirement that providers of schemes should be obliged to accept non-recurring contributions of a mere £10 and that employers with fewer than five employees should be obliged to make stakeholder schemes available to those employees.Instead, we are offered the prospect of what amounts to a stripped-down variant of the established Personal Pension Plan, open to all but the occupational scheme member and offering new features which will have great appeal to the tax planner, such as the facility to make contributions other than from eligible earnings and with no minimum age restrictions.

This opens the door to a whole new savings medium for non-working wives, children, grandchildren and other fortunate recipients of higher rate taxpayers' benefaction.Solicitors therefore need to be aware of stakeholder pensions as a potential financial planning tool for themselves, their families and their private clients.

They also need to be able to advise th eir corporate clients on their legal obligations in relation to stakeholder schemes; and finally they need to determine whether they will be obliged to offer them to their own staff, or whether it would be in their interests to do so in preference to any approved alternative means of pension provision which might be available or which might already be in place.Stakeholder pensions cannot be regarded in isolation.

Because of its potentially widespread appeal, and the inevitable overlap with existing types of pension provision, the low-cost charging structure on which stakeholder status is based is already infecting other types of money purchase pension provision.

In particular, charges on individual and group personal pensions are being pared; intermediaries' commission levels are being reduced; policies are being made more flexible; and new distribution media are being explored.The main pension providers (of which there are now probably no more than a dozen) cannot afford not to be represented in the stakeholder market and are having to revise their administration systems completely to enable them to work within the charges constraints.

Human involvement will be at a minimum, and reliance will be placed on electronic communications, including Internet and digital TV, and remote interface with employers' payroll systems.A further irony is that the beneficiaries of this process will be those who are able to afford more meaningful contributions and wish to avail themselves of the wider investment opportunities offered by the new generation of 'Stakeholder Plus' personal pension products which are currently being designed.

The precedent is Individual Savings Accounts (ISAs), where a basic product complying with government criteria covering cost access and terms spawned a less prescriptive product offering additional benefits to the more sophisticated investor.Most of the rules for stakeholder schemes have already been finalised:-- A 1% per annum maximum charge, and no transfer charges;-- Minimum contribution no higher than £20 (non-recurring);-- Contributions up to £3,600 a year regardless of earnings;-- Contributions in excess of £3,600 a year based on earnings and age (as for personal pensions);-- Employers with five or more employees must designate a stakeholder scheme and provide access;-- Employers do not have to contribute;-- Employers must forward contributions to schemes direct from payroll if requested; and-- Employers must make stakeholder available to their staff by no later than October 2001.A casualty of the alignment of stakeholder schemes with the personal pensions regime is that personal pensions (but not s 226 retirement annuity contracts) will lose with effect from April 2001 the facility which they currently offer, to carry forward unused contribution entitlements for up to seven years.

Stakeholder schemes will be able to accept contributions as from 6 April 2001, and providers will be able to register their schemes with the Occupational Pensions Regulatory Authority as from October 2000.

Meanwhile, schemes can only be sold on the basis that they are potentially compliant, or 'stakeholder-friendly'.To help law firms address the question of stakeholder schemes, Solicitors for Independent Financial Advice (SIFA), the network for solicitor financial advisers, is holding training sessions in locations throughout England and Scotland during the coming months, at which SIFA firms specialising in pensions matters will be equipped, with presentational aids and support material, to hold seminars for other law firms in their areas.

The scope of the advice which will be available will not be confined to stakeholder schemes, but will also embrace group personal pensions, self-invested personal pensions (which can be used as a vehicle for the purchase of practice premises), and retirement options such as income drawdown and investment-linked annuities.These seminars will take place in autumn 2000, and details will be available on SIFA's Web site (www.sifa.co.uk) which also explains the work of the 230 SIFA member firms and provides access to the SIFA database for firms wishing to refer financial services business to them on an agency basis.