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

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

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)

simplified pension plan (SIPP) is intended for small and medium companies. The employer who wants to set up an SIPP will have to contact:

  • financial institution that offers this type of plan
  • a representative or consultant in group pensions
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