Directors' Briefings

Company pension schemes (HR 7)

Companies are not obliged to set up their own company (or occupational) pension schemes, but the government has said it intends to encourage company schemes as the best way of providing pensions for employees. But changes in legislation, as well as demographics, mean that company pensions are expensive to provide. Plans to set a 'default' pension age at 65, and to discourage forced retirements, may make things easier. In any case a pension scheme is a selling point in attracting and retaining employees.

This briefing explains:

• The different options.
• The costs to an employer.
• Where to get help.

• Read full document (PDF)

Personal pension schemes (HR 8)

The basic state pension, for an individual, is currently £82.05 a week.

To boost your income in retirement, you need to make your own arrangements. At present your choices are as follows. You may be able to join a company (or ‘occupational’) scheme (see Company pension schemes, HR 7). You may be happy to use a stakeholder pension scheme (see Stakeholder pensions, HR 33). The third alternative is to take out some other form of personal pension scheme.

Tax relief, and, in some cases, National Insurance rebates, will boost the amount you can invest in pensions. But longer life expectancy means you need to invest as much as you can, as efficiently as you can, for a comfortable income after retirement.

The tax regime for pensions is to be simplified from April 2006 with a lifetime limit and an annual limit on tax-favoured contributions replacing the current complex web of tax restrictions. However you should not miss out on the opportunity to use tax relief and build up income in the meantime.

This briefing explains:

• Who should take out a personal pension.
• How much to pay in.
• How to choose a scheme.
• Where to go for advice.

• Read full document (PDF)