Are Company Pensions A Good Idea?
Many employees and employers have been questioning (company) pension schemes. The fact remains that paying into a pension is still one of the most efficient long term investments, for most people and particularly for those who run their own Company.

Key considerations include:
  • Individual payments qualify for income tax relief at the marginal rate.
  • The pension payments do not attract any liability to National Insurance Contributions on the Company, Director or Employee.
  • Company or Employer payments into registered pension schemes attract corporation tax relief. Company or Employer pension payments qualify in exactly the same way as you claim any costs associated with running your business - for example travelling expenses.
  • Making Company payments into registered pension schemes can be a valuable tool in reducing your Company’s exposure to corporation tax. Effectively, you use company money to fund an account that belongs to the Director or Employee. The payments made reduce your corporation tax bill and the resultant account, although funded by the company, belongs to the individual.
  • For a company, a pension benefit may be the key to attracting the best employees.
  • The pension is the property of the individual and as such is protected from creditors should the company go under.
  • The money or assets held in a pension grow in a tax advantaged environment.
  • When you retire, you can take 25% of your pension fund as a tax-free lump sum, the remaining 75% is used to secure a retirement income.
  • Liquidity is an issue, for businesses and individuals, which not be ignored as in the contributions to a pension are not accessible in the same way as other investments.


Questions there may be, but the advantages of a pension are hard to ignore.

 

Please note, the information provided does not constitute advice. You should contact us to arrange a financial review should you require any further information. 17/08/2009.