Workplace Pension Schemes
If you are thinking about setting up a company pension scheme for your employees, there are a number of things to consider and you are likely to need help from a professional adviser. Our Corporate Pension Advisers are available to help you make the right decisions for the benefit of both your business and your workforce.
There are a variety of types of scheme that can be set up. These include:-
Occupational Schemes. Schemes where pensions are based on Final Salary (defined benefit schemes) are very thin on the ground these days as most companies prefer to go down the Money Purchase route (defined contribution schemes) where costs to the employer and employee are known.
Advantages of these types of arrangement are that the employer has a large degree of control over the scheme and often other benefits, such as spouse’s pensions if the member dies, can be included. However, they are governed by complex rules and can be more expensive to run than other types of scheme.
Group Personal Pension Plans. As the name suggests these arrangements are a collection of individual plans where each worker has their own policy and makes their own decisions where the money is invested usually from a wide range of funds. When an employee leaves they simply take their plan with them when they go. The employer’s involvement in running the scheme is usually fairly limited and confined to deciding how much to contribute themselves and being responsible for deducting any employee contribution and passing them on to the pension provider.
Group Stakeholder Plans. These work in much the same way as a Group Personal Pension because a stakeholder pension is a type of personal pension. The main difference is generally in the choice of funds available as running costs are capped, and various other requirements have to be met.
Quality Workplace Pension Scheme (QWPS). Whatever scheme you decide on, you will want to make sure that it counts as a QWPS when The New Personal Accounts regime comes into force in 2012.
Salary Sacrifice. Many schemes are arranged in agreement with employees
whereby extra pension contributions can be generated by using what is called
Salary Sacrifice and utilise a saving in National Insurance contributions. This is often very popular with employees who feel they pay enough tax already! Recent Budget changes will affect certain individuals.
The Government has proposed Auto Enrolment for all employees into pension schemes starting in 2012. For more information on the Pensions Reform and detailed guidance from The Pensions Regulator go to:
A pension is a long term investment. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.
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