# Difference between Executive Pension and personal pension



## Helen (13 Sep 2005)

Hi, 
I have scoured the threads in this forum and can't seem to find out the difference between an executive pension and a personal pension. 
I currently have an executive pension, but am looking to change as the charging structure is not competitive anymore. I have read that the Quinn life freeway is not an executive pension, but I don't know how important this is.
Can anyone shed any light on it for me?

Thanks


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## Betsy Og (13 Sep 2005)

Maybe this is oversimplistic or just plain wrong, but I thought an Executive Pension was under an occupational pension scheme, i.e. set up by employer, whereas a Personal Pension was one where an employee in non-pensionable employment or self-employed contibuted to themselves.


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## JJ2000 (13 Sep 2005)

I think an Executive Pension is only available to directors or shareholders whose shareholding is over a certain percentage. A key advantage can be in the tax saving for large contributions where the contribution comes from the company as opposed to the individual. Take a look at this thread:

http://www.askaboutmoney.com/showthread.php?t=14231

where something similar was talked about. Also if you say the charging structure is note competitive anymore, and if you own your own company, and if you've got substantial funds in your existing pension, you may want to consider a flat fee SSAP - take a look at this thread:

http://www.askaboutmoney.com/showthread.php?t=14253

- after a certain value in the fund it can be more attractive to switch to a flat fee e.g. if the flat SSAP admin fee was 1250 per annum then after you've reached 125,000 you've effectively got a mgt charge of less than 1% thereafter - watch your fund admin fee as well though


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## Westbound (13 Sep 2005)

The name executive can be a bot of a misnomer, they are small Defined Contribution pension schemes that are mainly used by directors, but they can also be used by small private companies as pensions vehicles for individual members of staff. The Executive schemes are approved under the same legislation as the larger DB and DC schemes, whereas personal pensions are approved under different legislation.

The main differences are that in an EPP, the employer can contribute to the scheme on behalf of the employee and the employee can contribute as well and claim tax relief, making contributions to the relevant age related limit (15% to 30, 20% 30 and over etc.). The member must also be taxed under schedule E (PAYE).

On a PP, the earnings must be relevant i.e. Schedule D and there are obvuiously no employer contributions. The contributions are paid at the same level as for employee contributions in the EPP 15% etc.

The other major difference was the way benefits could be taken. In PP it was simply 25% of the fund as cash and 75% to buy an annuity. for the EPP the rules where based on the revenue maximum based on service and salary, for maximum cash and a pension. These rules have changed somewhat for 5% and 20% directors and there is alot more flexibility with the EPP nowadays what with the advent of ARFs etc.


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## bocade (13 Sep 2005)

Quinn Life does have an Executive Pension, another name for a Company Pension Scheme but encompasses special rules for proprietary directors i.e. access for option to take 25% tax free lump sum at retirenent as opposed to tax free lump sum based on years of service.


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## Helen (15 Sep 2005)

Thanks everyone for your advice - starting to see the wood for the trees!


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