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Executive Pension Plans
These are largely for senior staff and those who own and control their own company. The regulations were fairly complex, and had been subject to repeated changes over the years, but in general it is a matter of the employee and employer putting in contributions to build up a fund that can be used to buy a pension. Normally the employer contributes the largest proportion share of the investment.
Their main attraction was that they often allowed larger contributions to be made than to the other types of pension available but following changes pension regulations in 2006, they are now subject to the same Annual and Lifetime Allowance rules as other types of scheme.
Contributions made by the employer are unlimited. Employer contributions are deductible against corporation tax provided that they are wholly and exclusively for the purposes of the employer’s trade. If an employer’s contribution is over £500,000 more than the previous year, tax relief may be spread.
If you have benefits in this type of plan then you may be able to protect the benefits you have built up under these schemes prior to April 2006 and particular care needs to be taken if you are considering transferring these benefits to another type of pension plan.
If you wish to discuss the above further or require information on any of our services, then please contact us.
Any reference to legislation and tax is based on FPP’s understanding of UK law and HMRC practice. These may be subject to change in the future. Tax rates and reliefs will also change and their value to you will depend on your individual circumstances. No guarantees are given regarding the effectiveness of any of the above strategies.