Setting up a pension plan
Who decides to set up a supplemental pension plan?
Usually, a company's union or other employee group proposes the creation of a pension plan. The employer, however, makes the final decision.
The first steps
When an employer decides to set up a pension plan, the following elements must be defined:
- the group or groups of employees who will be covered
- conditions for joining the plan
- the amount of the employer's contribution
- the amount of the members' contributions, if any
Choosing the right plan
To choose the right type of plan, the employer must consider:
- the size of the company
- the company's financial means
- the employees' needs
The employer must also know the details, obligations anad costs of each type of plan.
Plans made to measure
A defined contribution plan is suitable for both medium and large companies. To set one up, the employer will have to contact:
- an insurance company
- a representative or consultant in group pensions
- a trust company
- a firm of consulting actuaries
A defined benefit plan is better suited to a large company. To set up such a plan, the employer will have to contact:
- a firm of consulting actuaries
- a life-insurance company (in some cases)
A simplified pension plan (SIPP) is intended for small and medium companies. The employer who wants to set up an SIPP will have to contact: