Pension Groups

Hi there,

I'm new to this whole area and I'm in the process of setting up a group pension scheme for an SME. The pensions adviser in the bank (whom I feel is taking advantage of my naivety) has told me that the minimum number for a group pension is five people. I was hoping to set up one group for the Drirectors and another for the employees. There are four Directors. What is the best course of action for me to take in this instance? Do I have to take one of the employees into the Directors group? Surely any more than two people can consitute a group...perhaps it depends on the provider?

Joolz

That would normally be the case with banks/insurance companies. You should also be aware that you bank is only offering you their product and you should shop around yourself, or employ a broker to set out the options.

That said, if you have a group of employees and 4 directors you could set up one scheme with 2 separate categories, one for directors, the other for the employees. If you want two separate schemes, then you could talk to other companies out there, for example the insurance companies, they may be willing to accept one 4 man executive scheme if a separate oridinary employee scheme is more than thier minimum.

On the 2 category route, each category can have it's own contribution rates etc. The Directors (if they are 5% or more directors) will still be allowed to take advantage of the wider range of retirement options, for example the ARF route.

Also, you need to be wary of the charging structure that will apply and if any commission will be payable. Also, you need to think about the admin end of things and how your bank's admin would stack up (online access for example). Also, Many of these institutions are willing to accept a cheque for the contributions each month as running it on a DDM can cause headaches from your end of things when it comes to reconciling things.

As Westbound says, your bank is selling you the line that suits them. There is no minimum number for a group pension scheme, and there are plenty of other pension providers who will be perfectly happy to set up a scheme that suits you. Any competent provider will allow you to set up separate contribution arrangements for every single member of the scheme, let alone two categories.

I would suggest you talk to a broker with some experience in pensions. Agree a fee or commission rate beforehand, but it is worth involving someone who knows what they are talking about.

d

Thanks for your your advice. This is a family business and as a family member I've been thrown in at the deep end to try and get this sorted. Will definitely seek the assistance of a qualified professional! Thanks again.