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Group pension plans

A Group Personal Pension Plan or GPP is where an employer makes an arrangement to offer personal pensions to its employees. This is 'defined contribution' scheme where each employee has a separate contract or pension plan with pension provider or advisers but contributions are collected and administered through the employer's payroll

What is the difference between a GPP and an individual personal pension plan?

  • Increased cost effectiveness as your pension provider is dealing with bulk business meaning they may offer reduced charges.
  • Simplified pension scheme management for the employer.
  • Reduced legal and administration costs mean a GPP can be less expensive to run than occupational schemes.
  • Employees can stop, start, or vary their pension contributions and can usually continue to pay into their pension if they change job.

Pensions and the employer

A competitive pension scheme is a valuable employee benefit. A pension is seen as one of the most important employee benefits in ensuring a loyal and motivated workforce. It helps enable you to build your business successfully, to retain, reward and attract employees; it can improve your reputation as an employer and attract the right quality staff.

Planning is key in every business and at the forefront of this, the most rewarding activity for you as an employer is the financial wellbeing of your staff. Gemini aim to understand your business on an individual level and recommend solutions that cater to your personal and business needs.

Pensions and the employee

As you will probably be aware the basic state pension is unlikely to be adequate for your employees to live on at retirement age. In addition to that, the state pension age is increasing so you will also have to wait longer to receive any state pension benefits.

Gemini believes that a pension plan is a way of replacing your salary on retirement. We have a wealth of knowledge and experience and are well versed in all pension rule changes.

A company pension scheme offers you, the employee, a tax efficient way to save towards retirement. You make payments while you are working. Once you come to retire, any money held in your pension can be used to provide you with an income, or a tax-free lump sum and a smaller income, for the remainder of your life.

How do pensions work?

Investing into a pension plan is simple:

  • Making payments - Your company and the tax man make regular payments during your working life. Your employer may also additionally contribute.
  • Your payments are invested - In a range of professionally managed funds. Charges and investment performance will affect the fund value.
  • When you retire - Any money held in your pension fund is normally used to provide you with an income. Any pension income is taxed as earned income. You can usually take part of your pension fund as a tax-free lump sum, however this will mean you will receive a smaller pension income.

The Gemini Pension Service

With average life expectancy continuing to increase, it is more important than ever to have well invested pensions as a means of building wealth and making provision for a potentially lengthy retirement.

Gemini aim to guide you through your key pension decisions, using our many years of specialist pension experience

The Gemini pension service includes:

Pension Scheme Investments

There are many different opportunities for pension investments, which can be confusing. We can help you to identify which types of investment are most appropriate for you and your employees. We can also advise you on which investment managers you should use, whether as a one-off service or for regular reviews.

The same service is available to Companies wishing to invest Corporate Money

Existing Group Pension Scheme Audit

If you already have a pension scheme in place, we can conduct an audit to ensure the scheme meets the company's requirements and remains competitive. We will work in partnership with you to give you the peace of mind you need.

Pension Transfer Service

Employees may have several pension plans with different providers. Gemini offers a pension transfer service to help your employees consolidate their pension savings where it is appropriate to do so.

Company Pension Schemes

Some companies prefer to operate more than one pension scheme to accommodate the differing financial needs of alternate groups of employees, owners and/or senior management. Gemini can assist you with this or a single pension approach.

Group Personal Pension

A Group Personal Pension (GPP) is the simplest option for a company wishing to establish a pension scheme for its employees. They can often be set up with simple administration and, once up and running, many functions can be managed online.

Each employee is assigned their own personal pension within the company 'umbrella' which gives the maximum flexibility around contributions, investments, the timing of retirement etc.

Regulatory requirements are significantly lighter under a GPP than other company pensions, owing to the fact that neither the company nor its directors have to act as trustee. Aside from ensuring that you pass over contributions in a timely fashion, there is not much else for you to worry about.

New legislation came into force, in stages, from 2012 compelling all employers to make some pension provision for their employees. A GPP often allows you to easily meet this requirement.

Auto Enrolment

Whether you already offer a company pension scheme or not, you need to be aware of Auto-Enrolment.

Depending on the size of your company, at some point before February 2017 you will be required to enroll all of your eligible staff into a qualifying pension scheme and make a minimum contribution on their behalf.

For more information click here

Occupational Money Purchase Scheme

An Occupational Money Purchase Scheme is a trust-based pension that is specific to a particular employer or group. This means that when en employee leaves the company, they can no longer contribute into the scheme.

Like GPPs the benefit available upon retirement depends on the amount of money paid in, the return on the underlying investments, and the terms available for converting the accumulated sum into an annual pension.

Occupational Money Purchase Schemes became less popular after April 2006 when the rules governing them were brought into line with personal pensions, although there are still existing schemes in operation.

These types of schemes are more onerous for the employer (which usually acts as trustee) in terms of increased statutory reporting requirements that must be met, and actions need to be approved by the company, rather than just the member.

Occupational Defined Benefit Scheme (Final Salary)

'Final Salary' Schemes, as they are often termed, are linked to a specific employer in the same way as Occupational Defined Contribution Schemes, but they differ considerably in that the pension at retirement is determined by formula at outset, rather than depending on the level of contributions, investment returns etc.

Upon joining a scheme, employees will be entitled to expect a certain percentage of their final salary for every year they work for that employer. The longer they work (and therefore the higher their salary at retirement) the higher the pension they will receive.

It is down to the employer to ensure that there is sufficient money in the scheme to meet any future liability.

These types of pensions used to be the norm in the UK but various factors have combined to push the cost out of the reach of employers. Most schemes have closed to new entrants, and it is rare for employees to be offered membership outside of the public sector.

Self-Invested Personal Pension

A Self-Invested Personal Pension (SIPP) is simply a personal pension wrapper that can be tailored to your particular investment and financial needs, allowing you greater flexibility in choosing a wider range of investments, with beneficial tax treatment.

Under a standard personal pension (or Group Personal Pension) your investment options will be limited to those offered by the insurance company providing the plan. Under a SIPP, there are no such restrictions. This gives you ultimate control over how you invest your money.

Group SIPPs are becoming popular in recruiting quality staff, and many employers now use them alongside a traditional Group Personal Pension to reward their most valued employees.

Small Self-Administered Scheme

A Small Self-Administered Scheme or SSAS is an occupational pension scheme with fewer than 12 members, most or all of whom would be the company directors.

SSAS's offer a great deal of investment flexibility, as well as the ability to both borrow and loan money for various purposes. They can also be used to purchase the commercial property that the employer operates from, which can bring additional tax benefits.

As an Occupational scheme, SSASs are subject to some of the strict reporting requirements and the requirement to have trustees in place, but since they are necessarily smaller these are less onerous than schemes that encompass all employees.

Please call us FREE on 0800 255 0123 or click here where one of our advisers will contact you for a no obligation discussion of your own personal circumstances'

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Gemini Wealth Management Ltd is Authorised and regulated by the Financial Conduct Authority Registered in England & Wales No. 5919877 Registered Office: Gemini House, 71 Park Road, Sutton Coldfield, West Midlands B73 6BT The Financial Conduct Authority does not regulate tax and trust advice, will writing and some forms of buy to let mortgages. The guidance and/or advice contained in this website is subject to regulatory regime and is therefore restricted to consumers based in the UK.

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