Occupational pension question

aoifem_2

I am starting a new job very soon and one of my first tasks, no my first task as I will be losing out otherwise, will be to help the Director set up a penison scheme for the company. I have been researching a little and am getting more and more confused the more I read. Can anyone tell me what the first place of contact should be? I just need to be able to present the Director with a list of alternatives to make it easier for him to organise the scheme. Form what I have seen of him, he is so busy running so many ventures that I shall be doing it all!!

dunstonh

If you are not pension qualified then you ought to be looking to get a professional in to do it. Otherwise you arent going to know whether an EPP, PPP, SHP, GPPP, COMP, CIMP or others are going to be best for your company.

Any IFA can discuss PPP, SHP and GPP. More specialist IFAs will need to be involved with EPP, COMPs etc. Many providers will want an FSA authorised individual involved in setting up the scheme.

As for terms and costs, that will vary depending on whom you use, how much work will be involved for the IFA and now many members and amounts involved. Future workload will be important too. i.e. will you be adding new members direct with the insurance company via their website or will the IFA have to add members.

Pal

aoifem - How big is the company?

EdInvestor

Step one would probably be to decide on whether you want to set up an occupational company scheme (money purchase or final salary), which involves trustees and outside actuarial benefit consultants - or a Grouped personal pension (GPP) scheme which is a bunch of personal or stakeholder pensions run by a life assurance company but administered (usually by an IFA) as a block. With a small company you can consider a number of options including an Executoive Pension Scheme (life company) or an SSAS or SIPP ( independent providers.)

I'd be interested to hear comments from our experts about the relative cost advantages from the member and company point of view between money purchase occupational pensions and GPPs these days.

I have heard it said that the latter can represent a significantly cheaper option as well as being much more flexible for both sides.

dunstonh

You can also have combinations of schemes. ie.e directors have an EPP and the employees have a GPP.

Pal

There are also many other options.

The arguments about GPP vs Occupational are mainly to do with the administration and investment arrangements - with an occupational scheme you can choose different administrators to your investment managers, and you can change the investment managers without changing administration. i.e. pick the best of each rather than pick a good investment manager who is crap at admin etc.

On the cost side, often occupational schemes can get cheaper deals on the investments because of the ease of dealing with one contribution cheque and filtering queries through an administrator.

The downsides include Trusteeship requirements/ valuations/accounts/lack of portability for members etc etc.

You could write pages on this stuff (and I often do as it is part of my job).

In practice most small companies go for GPPs or stakeholders while bigger companies have occupational schemes, hence my question to the OP.

DavidLaGuardia

Without getting into the nitty gritty, unless there is a jolly good reason, an occupational scheme risks at times being an unnecessary and maybe costly rod to the back that is best avoided when compared to the simplicity of GPPs.

Pal

While I appreciate the sentiment, it really isn't as simple as that, but it does depend hugely on the employer involved and the number of employees. For smaller employers I completely agree.

The OP needs to speak to an actuarial consultancy.

DavidLaGuardia

Apologies Pal, I agree with what your saying (the sentiment is born of witnessing and anecdotes of many occasions when a GPP would be so much less hassle). I should have said "for most Small to Medium Enterprises" and I acknowledge there are still no hard and fast rules even then.