Group Personal Pensions
Click here to find out about the changes to SIPP regulations.
If a company has five or more employees, the employer is required by law to offer the employees the chance to join a pension scheme.
This may be done via a but is now usually via a or a plan.
As and are individual schemes, the reference to a ‘Group Stakeholder Pension’ or ‘Group Personal Pension’ stems from multiple people (the employees) being members of the same product at the same time via a single association (the employer).
Whatever the type of pension plan, it will operate in accordance with the regulations that govern it, but ‘Group Pensions’ do have a number of particular features:
Group Personal Pension Provisions
- Group Personal Pension plans are arranged by the employer
- Normally the employer will contribute, but this is not compulsory
- Employers may make their contributions conditional upon employees paying into the scheme (e.g. the employer will pay 6% pa providing the employee pays 3% pa)
- If the employer does contribute, it is not contractual and payments may be stopped at any time
- Employees will be invited to join the scheme – this is referred to as ‘opting in’
- The employer will pick a ‘default fund’ into which all employees will invest unless they are given alternatives to select from
- The employer is not responsible for suitability, affordability or the performance of any investments
- Employee contributions are usually deducted from payroll and paid in net of basic rate taxation. Unlike for company pensions, higher rate taxpayers with Group Personal Pensions (or indeed other individual pensions) gain additional via their self assessment return
- Employees own their individual pension plan, completely separate from all other employees
- Employees can stop, start or vary their contributions to their account at any time, without penalty (although employer contributions may also cease if they do so)
- If employees change jobs, they can usually keep paying into their account
- Administration and running costs are borne by each plan individually. These may be cheaper whilst you are an employee of the employer and increase if you leave.
 Saving for retirement |
