Pensions are still generally regarded as the most effective way to save for retirement. However, it’s a complicated field. We can help you understand group pensions and find the most suitable option for your future.
A pension is a long term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Pension income could also be affected by interest rates at the time benefits are taken
Pension savings are at risk of being eroded by inflation
Group pensions are often referred to as workplace pensions. Put simply, it means a group of people are paying into the same pension scheme. As an employer, you have a legal duty to provide a workplace pension for your employees. The good news is, that while you need to establish the scheme, it is run by a pension provider.
The idea is that the pension pot will grow much faster when a group of people pay into it. To establish this growth the pension provider will spread the pot amongst a variety of risk levels, helping to protect the funds and maximise returns. This is important as your employees will have pension expectations, and a well-managed scheme should meet those expectations.
By law, 8% of an employee's earnings should be paid into your group pension scheme. The law also states that you, the employer, need to pay at least 3% of the 8%. You can pay more if you wish and many employers choose to do so as it can help increase staff retention.
There are two main types of group pensions. The first is defined benefit, the second is defined contributions. The defined benefit pays an employee an amount based on what they earn at retirement and how long they have paid into the scheme. Defined contribution schemes are when employees pay a set contribution into the pot every payday. If, as an employer, you’re paying the minimum 3%, the employee will need to pay 5% of their salary.
Any employee can opt out of your group pension scheme. However, turning down a group pension is like refusing a pay rise. It’s normally a good option because the employer contribution is on top of the employee’s salary.
Lynas Vokes has been operating for over 30 years. We’re specialists in all aspects of financial planning and are passionate about finding the optimal solutions for you. We recognise that every business is unique, which is why we’ll discuss your needs and goals before creating the most suitable group pension strategy for you.
We’ll also monitor your pension pot and other financial plans, ensuring they are performing as expected and keeping you updated on that progress.
Lynas Vokes appreciates how complicated group pensions can be. We can help, you simply need to contact us for a consultation today.
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The most obvious benefit of group pensions for employees is that employers will contribute to the pension pot, increasing the contributions and the size of the overall pot. In short, employees are likely to get better pensions when they retire.
As an employer, the right group pension shows your commitment to your staff. This, along with generous employer contributions, can help to retain staff. It’s a benefit that may not be matched elsewhere.
Of course, businesses will also be able to write contributions off against profits, allowing them to reduce their annual tax bill and increase net profits.
Perhaps the most difficult part is deciding how much you should contribute toward your employee group pension scheme.
Frequently asked questions
Understandably, you have questions. The following are the most frequently asked, however, if you don’t find your question and the answer here, don’t hesitate to contact us. We can help you with any query, no matter how big or small.
As an employer, you must have a workplace pension scheme and enrol all qualifying employees. That means anyone over 22, earning more than £10,000 per year, and who predominantly works in the UK. An employee can opt-out if they wish.
If an employee leaves your employ then you no longer need to pay into the pension scheme for them. In most cases, they cannot pay any more in either. The funds will simply be frozen for the future. In some cases, employees can continue to pay in or transfer the pot, speak to us to clarify the details of your scheme.
Yes. Your obligation is to provide them with a group pension and ensure that 8% of their earnings (with a minimum of 3% funded by you) is paid in. Any employee can choose to take a separate private pension as well.
Legally you only need to pay in 3% of their earnings, the employee takes care of the rest. However, increasing periodically benefits the employee and can help convince them to stay in your employ. It’s worth reviewing contributions annually and potentially increasing them for valued staff members.
Yes, they have the right to do so and can have their contributions refunded if they opt out in the first 30 days.
We’re specialists in all aspects of financial planning, including pensions. Lynas Vokes understands the rules and regulations and we have a dedicated team which will ensure your business, and therefore your employees, get the most favourable possible returns on all of your investments.
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Pension pots can go up and down in value. Getting the investment balance right can be complicated. At Lynas Vokes we can do this for you. We’ll oversee your funds, give you frequent updates, and make sure you’re building a pension pot that will keep your employees happy.
All you have to do is contact our specialist team. We can talk you through all aspects of financial planning, including group pensions. We’re here to help you.
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