Company Pension Schemes

You only have to mention the words “Pension Scheme” and most Finance Directors turn pale. In recent years Finance Directors have been faced with increasing liabilities within their final salary schemes and payment of increasing levies to the Pension Protection Fund.  In the past employer’s provided pension benefits for their employees by means of an approved occupational scheme, either:

  • Defined Benefits – also called Final Salary.
  • Defined contributions – also called Money Purchase.

The costs of administration, the Pension Protection Scheme Levy and deficit funding has forced many employers to close their defined benefits scheme to new entrants or future accrual.

The new wave of company pension is The Group Personal Pension. This type of scheme can be used to comply with the requirements of a qualifying workplace pension arrangement

Occupational Pension Schemes are Trust based and bring both costs and liabilities to the employer. Personal Pensions are individual plans. The employer has no on going liability and simply contributes to a personal pension plan in the name of the employee. When the employee leaves service the plan goes with him and administration and cost is kept well under control.