Issued: 8 January 2004
1. What are the advantages and disadvantages of using Group Personal Pensions (GPPs)?
The main feature of a GPP from an employer's perspective must be its simplicity. In particular, the avoidance of a whole raft of complicated regulations and requirements that is the norm if you take the occupational pension route. Whether this is considered an advantage or disadvantage will depend upon the employer's point of view and what they are trying to achieve.
2. What criteria should a charity use when deciding if a GPP is the best option for them?
GPPs are ideal for employers who want to keep pensions at arm's length. The GPP provider will automatically take responsibility for investment policy decisions, trusteeship, complaint procedures, scheme accounts and administration.
Employers who are prepared to be more involved, and want to be seen as taking more than just a passing interest in employee benefits will seek alternative arrangements.
The success of any decision is dependent upon first finding out exactly what it is that you want. Most products can be described in terms of attractive features, but will these be of benefit to your organisation? Do your homework and you will stand a greater chance of getting a bespoke solution rather than one that does not fit.
3. How will new employment laws relating to discrimination affect pensions provision by charities?
The implementation of equal treatment in the workplace has generally led to a levelling up of terms and conditions. This has already had a major impact on pension provision. Further legislation regarding non-discrimination by age, disability, sexual orientation, religion or belief, and race is currently the subject of consultation and the full implications are unclear. However, if past experience is anything to go by further legislation will undoubtedly increase pension costs yet again.
4. What future developments do you foresee in GPP provision?
It is difficult to foresee any future development in GPP provision. Indeed, it may be the case that GPPs effectively disappear as they are already very similar to Stakeholder Pensions. If the 1% cap on expenses is removed then this should allow Stakeholder Pensions to increase investment choice, provide more advice and negate any possible advantage that GPPs may have.
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