employer cannot operate an occupational pension scheme based solely on employee contr

[Conan]

Without wishing to add to the confusion in this case, an employer cannot operate an occupational pension scheme based solely on employee contributions. Where an occupational pension scheme exists (not a PRSA), the employer is obliged to contribute a minimum of 10% of the total contribution.
So if the employee is contributing 2.5% of salary, then the employer must contribute at least o.3% (approx) i.e. 10% of 2.8%.

The only way that the emlpoyee can be contributing on his own (no employer contribution) is though a PRSA facility (where all the employer is doing is facilitating the deduction of contributions from salary, remitting them to the chosen PRSA provider and thus ensuring that the employee is getting tax relief under the "net pay" system).

Hal 2001, I suggest you clarify with the pension provider exactly how the pension plan is structured, who is contributing what, how its invested and what is the charging structure. From reading the mails so far, I am still unclear as to exactly what you have.

 

[jfitzer]

Re: Pension scam?

Conan, can this 10% be deemed to be covered by paying the cost of setting up and ongoing costs and providing a Death in Service?

 

[Guest126]

Re: Pension scam?

Hi jfitzer - yes it can, you are correct to best of my knowledge.

 

[jfitzer]

Re: Pension scam?

Thanks CapitalCC, can I ask you one further question, the 10% of annual contribution rule for qualification for approval (if not covered in costing) the initial leglisation, when changed from the 1/6th rule, was that the 10% was a criteria but did not specify that it had to be per individual (so effectively it could be covered by 10% of overall contributions going into one individual), I vaguely remember this being changed to per individual, is my memory serving me right??

 

[Guest126]

I think that the wording now is that the employer contribution must be "meaningful" and this woolly term is not explained exactly...but it is pointed out that 10% of the overall ordinary annual contribution would always be considered meaningful.

I can't recall any mention of it being per individual...I would doubt that such a rule would exist when one considers that an employer can always just set up the PRSA at 0% cost to employer instead.

 

[jfitzer]

So in saying that, an employer could effectively set up an Occupational Scheme pay the 10% of overall contributions to his "favourite employee" not pay a penny for any other employee but they still have the option to join. Maybe to be on the safeside, establish a Death in Service which can be relatively cheap. He has covered his obligations and does not therefore have to offer the facility for a PRSA. I can still vaguely remember the 1/10th rule being altered to per individual as opposed to overally but maybe I just dreamt it as I can find nothing on this!!!!