Company Pensions

Employers work place pension schemes including Final Salary, Money Purchase, and Group Personal Pensions (GPP).

Group personal pensions are becoming more popular with employers, these are low cost personal pension plans bought by groups of employees under the auspices of their employer.

Your employer will make a contribution to your occupational pension scheme in addition to deducting any contribution that you are required to make. You may make extra contributions to your occupational scheme to boost your pension provision up to a maximum limit of 100% of earnings or £3,600 (whichever is the greater) subject to a maximum of £40,000 per annum which is the current annual allowance. Your employers contributions count towards this limit.

Eligibility

Eligibility to join a company scheme varies from company to company. Some allow their employees to join either straight away or very soon after joining the company, whilst others put in place conditions before an employee can join such as a minimum 2 years of service, or upon reaching a certain age.

The two main types

There are two main types of company scheme, final salary & money purchase. They differ greatly in what they offer and how they work. At present, final salary schemes are the most common in terms of number of members, but many large firms are now switching over to the money purchase type because they are cheaper for the employer to fund.

A PENSION IS A LONG TERM INVESTMENT THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN. YOUR EVENTUAL INCOME MAY DEPEND ON THE SIZE OF THE FUND AT RETIREMENT, FUTURE INTEREST RATES, AND TAX LEGISLATION