Group Pension Schemes
The value of pensions and investments can fall as well as rise, you may get back less than you invested. Advice on Auto-enrolment & Employee Benefits are not regulated by the Financial Conduct Authority
- A Group Pension Scheme is a scheme set up by the employer and run by a pension provider, the pension remains a contract with the employer and the provider. There is typically no involvement of trustees unlike with Occupational Pensions.
- If personal contributions are made, the provider claims tax relief at the basic rate, higher rate taxer payers have to claim the extra tax relief through their tax return.
- The Pension pot builds using the employer’s and employees’ contributions alongside investment returns and tax relief.
- For employers the Group Pension scheme is beneficially because the pension provider is responsible for the administration work, reducing the day-to-day work for the employer.
- As a Group Pension Plan (GPP) is typically offered with economies of scale in mind, this helps to drive costs down.
- If an employee leaves the employer, the employee is no longer able to contribute to the pension fund, however they are still entitled to the money already in the pot when they turn 55.
- The contribution amount of the employer depends on their policies, willingness and the employee’s contribution. For example, they could match the employee’s contribution or they could pay a larger amount.
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