In our latest blog post, Noel Larney, QFA, Financial Advisor, gives an overview of pensions and the benefits they offer for both employees and employers.
Providing pension benefits for employees is an excellent way to reward and retain your staff and to demonstrate how much you value their long-term commitment to your business. In providing pension benefits you have a choice of a Defined Contribution Group Retirement Plan or a Group PRSA arrangement. Each arrangement has its own distinct benefits, therefore it is important that you obtain professional advice to help you select the most appropriate company pension for you and your employees’ needs. This blog post highlights some of the main differences between a Defined Contribution Group Retirement Plan and a Group PRSA arrangement.
Today’s business environment presents both financial and legal challenges for employers looking to provide pension benefits for their employees. It has never been more important to ensure that you have the right company pension plan in place to provide the pension and protection benefits your employees need.
An employer has a choice between a Defined Contribution Group Retirement Plan and a Group PRSA, both of which offer:
WITH A DEFINED CONTRIBUTION GROUP RETIREMENT PLAN
Detailed training is compulsory for all trustees of defined contribution pension plans. Insurance companies offer comprehensive support to employers in the following ways by:
- providing information so that employers can understand their scheme and legal obligations.
- providing comprehensive trustee training, approved by the Pensions Authority, which can be customised to suit your specific company needs.
- offer a corporate trusteeship facility.
This service can reduce the potential risks facing company directors because the trustee role is taken over. This means those directors of the company:
- do not require trustee training.
- are not automatically liable for potential Pensions Authority trustee fines.
- do not have any trustee responsibilities under the Pensions Act.
WITH A GROUP PRSA ARRANGEMENT
- There is no requirement for the employer to appoint trustees or undertake trustee training.
- Employees own and have control over their own individual PRSA.
- Employees have the opportunity to select the investment path for their own PRSA.
Defined Contribution Group Retirement Plan – provides Investment Choice solution, which facilitates:
- trustee indemnity from member fund selection responsibility (provided certain conditions are met).
- choice – offers a wide range of funds from which you can tailor an investment suite to provide to your employees.
- flexibility – members can pick from a suite of pre-selected pension investment funds.
- a default investment strategy – lifestyling strategy and tailors the investment fund strategy for each member, depending on their term to retirement. This service can reduce the potential risks facing company directors because the trustee role is taken over.
Lifestyle investment strategy is the ideal solution for members who want the security of a fund at retirement to provide a retirement lump sum and enable them to purchase a monthly pension for life.
Group PRSA arrangement:
The employer is completely removed from the investment decision making process.
- Choice – members choose from a suite of funds
- A default investment strategy – lifestyling strategy and tailors the investment fund strategy for each member, depending on their term to retirement
Defined Contribution Group Retirement Plan:
- contributions paid by employees, within limits, can qualify for tax relief in addition to any contributions made by an employer.
- there is no benefit in kind liability on employer contributions.
With a Group PRSA arrangement:
- the contribution limits apply to total contributions (employer and employee) for tax relief purposes.
- employer contributions are subject to USC payable by the employee.
If you would like to find out more, just give us a call on 1890 60 65 70 or send us an email.