The ultimate employee benefit

The state pension no longer provides the kind of lifestyle that many of us aspire to in our retirement. However, the number of people that still fail to make adequate pension provision beyond this is significant.

The company pension scheme is often voted the most popular employee benefit, simply because most people recognise that without the structure and contributions put in place by the employer they probably would never get around to sorting this out on their own.

The basics

Many employers have now established defined contribution or money purchase arrangements. In this arrangement, the occupational pension pays into a fund, and the fund is used to buy a pension (typically an annuity) when the individual retires. The pension is therefore determined by the value of the fund and the health of the annuity market when the individual retires, as opposed to their salary.

You may ask what are the benefits of creating a company pension scheme, and what is in it for the business?

There are a number of reasons to consider a company pension scheme, first and foremost is the ability to offer a good employment package to staff, after all the company is trying to sell itself as much as the candidate so if you don’t have one the likelihood is that your competition will. This theme continues with regards to staff retention, if you want to keep good employees then you need to be creating an environment that offers security and a reason to work for you over and above your competitors.

Company pension schemes quite often offer additional benefits beyond the pension framework such as Death in Service, which again represents a benefit to the employee and improves the general employment package.

Whilst the above may be considered more beneficial to employees rather than the business itself, there are of course corporation tax issues to be considered. A company pension scheme can be a good way of reducing your corporation tax bill, so rather than simply hand this over to the government you could utilise this money for the benefit of the business and employees.

If you would like to discuss your requirements with one of our Independent Financial Advisers then please click here, complete the enquiry form, and we will contact you to assess your circumstances, review the market place and then present options for you to consider.