COMPANY PENSIONS

A company can choose to pay into a Personal Pension Plan for its employees.  If it pays into one type of plan for a group of its employees this is commonly called a Group or Grouped Personal Pension Plan or Scheme (GPP).  This is still a collection of individual personal pensions and is covered by that legislation.  It is not an Occupational Scheme even though the employer will have established the plan, pays into it and as far as the member is concerned effectively runs the scheme.

FINAL SALARY SCHEME: A defined benefit scheme where the benefit is calculated by reference to the final pensionable earnings and length of service of the member. Many major schemes offer 1/60th of each year of service times final salary as a pension. Some offer 1/80th pension with 3/80ths times final salary as a tax free cash sum.
The scheme definition of pensionable salary may not be the same as the final salary that is the maximum that the Inland Revenue will allow to be included for Maximum Approvable Benefits. It will rarely include a company car and often excludes overtime or bonuses. This may allow extra contributions to be paid in order to increase the amount of cash or pension that can be taken.

FRS 17 :- Financial Reporting Standard

This replaces SSAP (Statement of Standard Accountancy Practice)

This does not just affect international firms who use" the big 5" accountants and actuaries to sort matters out for them, it affects all companies with a Defined Benefit or Final Salary Pension Scheme.

Many small firms have small insured Final Salary Schemes, possibly just running for just a few individuals. The insurance company that set it up may no longer be able to offer the detailed help and advice required to decide what is best for the company.

It is possible to continue to honour the promises made to your employees without the horrendous requirements of FRS 17 and the other new pension legislation affecting these schemes.

For a free initial discussion with one of our qualified pensions professionals
Telephone us on 024 7631 6000 -Or E-mail us at info@pensionadvice.ltd.uk
[CLICK HERE for a pdf compiled by Standard Life on the details and suggestions]

EXECUTIVE PENSION SCHEMES: Another name for a money purchase occupational pension scheme. Often used for directors or senior executives.

SMALL SELF ADMINISTERED SCHEME (SSAS): An Occupational scheme where all members are trustees and they choose their own investments. It is often used by small businesses to buy commercial property for the sponsoring employer to use.

SELF INVESTED PERSONAL PENSION (SIPP): A personal pension which has some element of self investment. Often used to purchase commercial property

TIME SCALE and DATES

The FRS17 Standard will be fully effective for accounting periods ending on or after 22 June 2003. Before that date companies can choose to comply fully with the new rules or to comply with the transitional arrangements.
The transitional arrangements will require the following additional disclosure. There is no requirement to compare figures for the previous years.
For accounting periods ending after 22 June 2001, the closing balance sheet information.
For the next accounting year, the opening and closing balance sheet as well as performance statement information including reconciliation of gains and losses for the period.
An FRS17 profit and loss charge will be made up of three components:

[1] Amounts charged to operating profit:

current service cost

past service cost (the full cost of granting a past service benefit improvement); less

unrecognised surplus used to offset past service cost.

[2] Other amounts charged to profit & loss:

settlement or curtailment cost; less

unrecognised surplus used to offset settlement or curtailment cost.

[3]Amounts charged to finance income:

interest cost; less

expected return on assets.