Gpp?

chesky369

Our company's final salary pension scheme will probably end sometime this year and the Trustees are thinking about starting a group personal pension for its members, rather than the existing money-purchase scheme which newer employees have joined. Can anyone tell me what the pros and cons are? I'm worried that as I've only got two years before I retire, I won't be able to build up a good fund in the time available.

Also, the Trustees are considering entering the property stock market, with a view to transferring to REITS when they start next year. Any comments?

dunstonh

Basically, there is little difference in it from the employees point of view on the money purchase vs GPP. Both are money purchase, both invest into investment funds. The only difference may be what the employer pays in themselves and the fund range available and consequently, what charges exist.

Having part of any investment in property can be seen as a good move and I already utilise REIT funds in many of my portfolios (and they are doing very nicely indeed).

If there is free money involved in the GPP, you should still take it. You dont have to commence the GPP at retirment and can leave it to continue growing. If you die before commencing it, the whole amount is paid out tax free. If not, you can commence it later in retirement to give you an income boost and maybe buy a new car or replace windows or any other potential capital expenditure that the 25% can be put to.

chesky369

thanks for that info. I have to say that, as my pension estimate is now somewhat less than I'd anticipated (by about £1,400 p.a.), it'll be more a case of eating, rather than buying a new car.

EdInvestor

Also, the Trustees are considering entering the property stock market, with a view to transferring to REITS when they start next year.

Could you explain a bit more about this? Do you mean they are investing some of the pension scheme's money in property funds?

IMHO a GPP can often be a better idea than a money purchase occupational scheme because more flexible as far as retirment age in particular goes, all else being equal ( charges, fund choice).