Company Pension

What Can You Expect From Your Company Pension?

Do you have a company pension? Do you know how to go about getting a company pension? If not, then you would definitely benefit from our company benefit guidelines outlined below.

Pension Worries

If you are worried about your pension you are certainly not alone. In fact, company pensions, and pensions in general, have been on the minds of the Government, the Trade Unions and the EU alike recently as they try to find a solution to the growing Pensions Crisis. So what do you need to know about company pensions?

As a general rule of thumb you will normally be better off under a final salary scheme than a money purchase pension scheme.

If you cast your mind back to your job interview, the company pension was probably the furthest thing from your mind and even the employer didn't mention it. In fact, you may be surprised to learn that recent studies suggest that company pensions are being discussed less and less during job interviews. The employer rarely highlights their Company Pension Scheme as a benefit to new employees and so it's hardly surprising that many people have been left in the dark about their Company Pension. However, it is becoming evident that we would all benefit from increasing our pension contributions and joining the company pension scheme.

What Is A Company Pension?

A company pension is a pension scheme which is established and administered for the employees by the company. There are two different types of company pension:

• Contributory - The employee makes pre-tax contributions. Many employers match this contribution which can be extremely beneficial to the employee.
• Non-Contributory - The employer makes pension contributions on the employee's behalf.

The employee can also make pre-tax additional voluntary contributions (AVCs) if they wish.

Not all company pension schemes are identical and some company pension schemes are certainly more advantageous to the employee than others. As a general rule of thumb you will normally be better off under a final salary scheme than a money purchase pension scheme. The risk of the final salary pension scheme will lie with the employer in their commitment to deliver you with a pension at retirement, regardless on their return on their investment. With the money purchase pension scheme, however, the money paid out will depend on the return on investment and the risk will lie with the employee.

Company Pension Obligation

Unfortunately your employer is under no legal obligation to offer you a company pension. However, companies with more than five employees are legally obliged to offer you a Stakeholder Pension as a minimum requirement. Stakeholder Pensions are cheap, flexible pension schemes which you may be best suited to you if you are on a low to moderate income - from £10,000 to £20,000 per annum.

If you are interested in looking into Company Pension Schemes as a valid option to your pension needs, then it is advisable to discuss it with a professional pension adviser.