Companies will be able to transfer stakeholder pension contributions over the Internet in a new alliance between leading insurers and software suppliers.
The initiative, co-ordinated by the life and pensions industry's technology standards body Origo, is vital to the success of the forthcoming stakeholder pensions, which come into force next April.
As pension companies can charge customers only a maximum of 1% of the stakeholder fund's total value, insurers are racing to deliver stakeholder packages online to avoid crippling running costs. The draft-extensible mark-up language standard has been developed by software suppliers association Basda. The Web standard is backed by the main life assurance companies and is due to be piloted later this year.
The Origo standard will allow businesses to transfer stakeholder remittance information, such as employee and employer contributions, over the Web to insurers every week or month.
Remittance details would later be matched-up with the BACS UK clearing system.
BACS is unable to offer insurers a remittance messing service, which could break down payroll data into individual contributions.
BACS, however, this week published guidelines to help companies send stakeholder pensions electronically from next April.
Origo is also due to meet the insurance industry Internet portal EMX to discuss the possibility of acting as a clearing house for stakeholder pension remittance.
The Inland Revenue has expressed an interest in this role, but not until two to three years' time.