Pension schemes for employees
Increasingly, employers are recognising that a comprehensive benefit package, rather than a simple pay packet, is more likely to produce a committed workforce and reduce staff turnover. Pensions form the cornerstone of such a package.
Most people now accept that they will be unable to depend on the State to provide anything more than a subsistence standard of living in retirement. Increasingly, State benefits are supplemented through private provision.
We can help you set up a Stakeholder pension scheme that will encourage loyalty in your existing staff and make it easier for you to attract people in the future.
Stakeholder pension scheme rules require employers with 5 or more employees to offer access to a stakeholder scheme, unless they offer a suitable alternative. For more information on your obligations on Stakeholder Pensions, visit our Stakeholder page.
The value of a stakeholder pension can go down as well as up so you may not get back what you invested.
Finding the best solution for the needs of you and your employees
Whichever route you choose, we can offer you a choice of funds into which the pension contributions can be invested. Our Corporate Financial Consultants will be able to guide you through the options available, and help you choose a solution, which meets the needs of both your business and your employees. We'll agree the level of your contribution and, if appropriate, we will talk to each employee about the right level of investment for them. All these arrangements can be reviewed at any time.
All contributions you make as an employer potentially qualify for tax relief and are invested in a tax efficient fund. Currently at retirement, which can be any age between 50 and 75, the fund accumulated in the pension is used to buy an annuity which pays a regular income for the rest of your retired employee's life, with the option to take a lump sum and reduced income. However, legislation will raise the minimum retirement age to 55 from 2010, and introduce more options for the way that income can be generated from the fund.
Most employees correctly perceive pensions as the most tax-efficient method of replacing earnings when they retire, and consequently a pension scheme is a vital component in any modern benefit package. It can dramatically improve your ability to attract and retain high-quality staff.
Taxation
The contributions you make to the above schemes should all qualify as an allowable business expense, which makes them a very effective and economical way of enhancing your employment package.
The above information is based on NFU Mutual's understanding of current HM Revenue and Customs practice and legislation, which are subject to change. The value of tax relief is dependent on personal circumstances.
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