Company Pension Schemes

iStock 000010827673XSmall1 300x199 Company Pension SchemesYou only have to mention the words “pension scheme” and most Finance Directors turn pale. In recent years finance directors have been faced with the liabilities surrounding running final salary schemes, payment of huge levies to the Pension Protection Fund and 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 or Stakeholder Scheme.

In this case 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.

From 2012 employers will have to automatically enrol employees into a national pension scheme known as NEST or into a suitable qualifying scheme.

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