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If you are an employer, the costs
and administration of setting up and running an occupational
pension scheme are daunting. However, there is an
alternative solution - the group personal pension
(GPP).
A GPP, as its name suggests, is
essentially a collection of personal pensions, each
individually owned by an employee. But although the
pensions are all owned by individuals, the scheme
is set up with just one provider.
Simple to run
GPPs are popular for a variety of
different reasons. The relatively low cost of running
the scheme is particularly appealing. And so is the
simplicity of dealing with one provider, rather than
having to make payments to a variety of pension companies,
as would be the case if every employee had a different
personal pension and the employer made contributions
to all of them.
Lower charges
Employee contributions are often
deducted by the employer from their salary and are
paid into the pension, which is much easier than setting
up a direct debit. Employees are not obliged to contribute
to the scheme. A GPP scheme can also mean lower set-up
and ongoing charges than for an individual personal
pension, so more of the employees' money is invested
in their funds.
The contract is between the employee
and the personal pension provider. The life office
as provider, and not the employer, is largely responsible
for the administration of the scheme - great news
for smaller companies that may not have the resources
to administer an occupational scheme.
For many companies, GPPs are now
the more favoured group pension solution because of
the ease of administration, cost and the fact that
they carry the least exposure to the Pensions Act.
With the imminent arrival of Stakeholder
pensions, companies employing five or more employees
will be obliged to offer their employees access to
a stakeholder arrangement unless they already have
either an occupational pension scheme or a group personal
pension scheme where the employer contributes at least
3% of the employee's salary, there are no exit penalties
and employees can join within 3 months.
To find out the options available
to you or to review your existing arrangements, please
contact us to arrange a meeting.
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