Choose the right pension scheme

Comparison of pension schemes

Before choosing a pension scheme you first need to understand the main points to consider and weigh up the differences between the pension options available to you and your business.

A professional pension adviser may be able to help you make your decision. They can tell you about the costs and tax breaks and help you find a scheme which best suits your business. You can search for a pension adviser at the Society of Pension Providers website.

Occupational pension
Occupational pension schemes (particularly salary-related schemes) are now mostly offered by large companies and the public sector. Smaller companies have backed off because of the cost of administering and topping up the pensions.

See our table of the advantages and disadvantages of an occupational pension scheme.

New accountancy rules forcing employers to account for pension assets and liabilities in their company accounts may also have an adverse effect because of the impact on company balance sheets.

Group personal pension
A group personal pension (GPPs) scheme is a collection of individual personal pension plans grouped together by the pension provider. This type of pension arrangement offers scope for you to tailor a scheme to your and your employees' needs and GPPs are becoming increasingly popular. Stakeholder pensions can also be grouped in this way.

See our table of the advantages and disadvantages of a group personal pension scheme.

Stakeholder pension
Stakeholder pensions were introduced in April 2001. Minimum standards are set down in law ensuring that stakeholder pensions are flexible and portable with capped management charges. Employers with five or more employees are required to designate a stakeholder pension scheme if they do not offer a good value company pension arrangement.

See our table of the advantages and disadvantages of a stakeholder pension scheme.

Relevant employees must be consulted about the company's choice of designated scheme and employers must make payroll deductions of pension contributions for those employees wanting to pay into the scheme. Employers don't set up the stakeholder pension scheme - the scheme provider does that.

Subjects covered in this guide

• Introduction
• Benefits of having a workplace-based pension scheme
• Choosing an occupational pension scheme
• Choosing a group personal pension
• Choosing a stakeholder pension scheme
• Approved pension schemes for directors and owners
• Unapproved pension schemes for directors and owners
• Comparison of pension schemes
• Organisations that advise on pensions schemes
• Considerations when choosing a pension scheme
• Here's how I selected the best company pension scheme for my business

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