can you limit membership of a employer pension?

M

morant

Guest
our company is looking to set up a pension scheme for its managers only. It currently has a PRSA but it does not make any employer contributions whereas this new penion would only be for managers and the company would make % contributions. Is this ok?
 
I don't think that there's anything preventing the company from doing this (or any problematic tax implications) but surely the company's accountant should be able to confirm?
 
It has made a PRSA available to all staff I presume?

If it has, then no probs with a Manager Pension Plan.
 
CapitalCCC said:
It has made a PRSA available to all staff I presume?

If it has, then no probs with a Manager Pension Plan.
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Even if the managers scheme is the only one that the employers contribute to? Our Accountant felt that it could be grounds for discrimination but I felt that it didn't exlude anybody on the basis of the 9 grounds rather it limited membership based on qualification.
 
You should ask your pension advisor, not your accountant.

There is no problem with having a pension plan for some staff.

It is a form of remuneration - we all have different salaries.
 
Seems that it isn't a legal problem, but the other employees may view it as a slap in the face and become de-motivated by the situation.

It's certainly a move which should be handled carefully if staff retention isn't to become an issue.
 
Beware!! My recollection on this is somewhat hazy and the point may not apply with a PRSA pension - others can advise on this.

Several years ago, I think, subject to correction, it was Loctite, split their pension fund, forming a new scheme for managers. The problem, I believe, was that the managers fund significantly depleted the main fund, leaving chicken feed for the majority. The issue was dragged through the courts - don't recall the outcome.

As I said at the outset, this issue may not apply here. If it does, protect YOUR asset.
 
If morant's employer is only setting up a pension scheme now, it will with 99.9% probability be set up on a defined contribution basis, where each member's fund is ring-fenced, thus protecting them against any unfair pooling of assets like Marathon Man describes.

PRSAs are by definition defined contribution arrangements and the assets of one individual's PRSA can never be shared with the assets of someone else's PRSA.

While the corporate ethics and wisdom of restricting employer pension contributions to management are perhaps open to debate, the practice is by no means illegal. Management probably get bigger salaries too. That's capitalism.
 
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