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Group Pensions


Group Stakeholder Pension Plan

This type of policy is similar to a Group Personal Pension Plan but is a group of Stakeholder Pension Plans. The employer can contribute to the policy and they can negotiate special terms with the provider such as reduced costs and flexible contributions. The policies comply with the Stakeholder rules such as the maximum charge of 1.5% per annum for the first 10 years, falling to 1% thereafter. There is a legal requirement for firms with 5 or more employees that they need to designate a Stakeholder Scheme and allow all employees access to it. Should a member leave the scheme, the member can continue to contribute to the policy if they wish. Tax Free Cash and a pension on the required basis can be purchased with the fund at retirement.

 

Group Personal Pension Plan

An employer can help set up a pension arrangement that groups together individual Personal Pension Plans known as a Group Personal Pension Plan. It has the advantage over individual arrangements that the employer pays into the plan and they can also negotiate special terms with the provider such as reduced costs or flexible contributions. On leaving employment, although the employer contribution would cease, the member can continue the policy on their own. At retirement there is the ability to take a Tax Free Cash lump sum subject to Inland Revenue set limits, with the residual fund used to purchase an annuity on the required basis.

 

Group Money Purchase Pension Scheme

This type of pension is set up by an employer for the benefit of employees and directors. They are also known as Defined Contribution schemes as the amount of benefits in retirement depends on the contributions paid. The premiums are paid into a fund which grows depending on the level of returns from the underlying investments and the amount deducted in charges from the fund. From the fund available at retirement, Tax Free Cash can be taken subject to Inland Revenue set limits. The remaining fund can then be used to purchase a pension which can include certain additional benefits such as a widow’s pension and the pension increasing in payment to keep in line with inflation.

The employer will make contributions on behalf of the employee which he/she can add to. Some companies state that for an employee to join their scheme, they have to make a minimum level of contributions.

The value of an investment and any income from it can go down as well as up and you might not get back the original amount invested. The past is not a guide to the future.