Good things for you & your employees

You should consider all the consequences, both personal and for the business, that might follow from the serious injury, illness or death of yourself or your employees. As well as the impact on individuals and their families, the loss of a “key” person – whether permanent or temporary – could have a significant impact on the profitability of your business. Policies providing benefit for serious illness, disability or death of employees and retirement benefits can be arranged on either an individual or group basis. There are valuable tax concessions for both employers and employees for retirement benefits schemes. There are usually tax concessions for employers who arrange insurance for their employees against death, disability or sickness. Your accountant or insurance adviser should be able to provide further details.

Offering a pension has a positive effect on employees

A good pension scheme should not be looked at as an expense, but as an investment in your business. Rewarding and motivating employees with good pension provision sends a strong signal of commitment to staff, and can aid motivation, recruitment and retention of the best employees.

A pension provided, and contributed to, by an employer regularly tops polls of employees as the most valuable benefit that an employer can offer. This trend is set to continue due to the growing awareness amongst individuals of the need to take responsibility for one’s own future retirement needs.

Pensions have attractive tax benefits. For the employee this means that they get the full value of any contributions that you make for them. For example, if you, as an employer, contribute £1000 towards an employee's pension, £1000 will be invested in their plan. If you were to put that sum towards a pay rise, the employee would only get £680 in their pay packet after National Insurance and income tax deductions (based on 2002/2003 tax and NI rates). That's £320 less.

For the company, contributions can be offset against corporation tax. This means that a £1,000 contribution towards pensions will cost the company, assuming they are paying 30% full rate corporation tax, only £700.