We’re here with practical legal information for your business. Learn about employment law, company law and more.

Setting up a business involves complying with a range of legal requirements. Find out which ones apply to you and your new enterprise.

While poor governance can bring serious legal consequences, the law can also protect business owners and managers and help to prevent conflict.

Whether you want to raise finance, join forces with someone else, buy or sell a business, it pays to be aware of the legal implications.

From pay, hours and time off to discipline, grievance and hiring and firing employees, find out about your legal responsibilities as an employer.

Marketing matters. Marketing drives sales for businesses of all sizes by ensuring that customers think of their brand when they want to buy.

Commercial disputes can prove time-consuming, stressful and expensive, but having robust legal agreements can help to prevent them from occurring.

Whether your business owns or rents premises, your legal liabilities can be substantial. Commercial property law is complex, but you can avoid common pitfalls.

With information and sound advice, living up to your legal responsibilities to safeguard your employees, customers and visitors need not be difficult or costly.

As information technology continues to evolve, legislation must also change. It affects everything from data protection and online selling to internet policies for employees.

Intellectual property (IP) isn't solely relevant to larger businesses or those involved in developing innovative new products: all products have IP.

Knowing how and when you plan to sell or relinquish control of your business can help you to make better decisions and achieve the best possible outcome.

From bereavement, wills, inheritance, separation and divorce to selling a house, personal injury and traffic offences, learn more about your personal legal rights.

Pensions for senior managers

There has never been more choice and flexibility for senior managers when it comes to pension saving. Most employees can choose from a wide range of investments for their pension fund, contribute more to their own retirement, and exercise greater control over drawing their income.

At a time where life expectancy is increasing and there is less certainty about future financial security, a good pension scheme can be an invaluable benefit.

The benefits

The options

Nearing retirement

Use advice

1. The benefits

Occupational pension schemes are expensive but the value they create usually makes the outlay worthwhile.

You can differentiate your firm from your competitors

  • Offering a superior occupational pension scheme can help you attract the best staff.

Providing attractive employee benefits retains key senior individuals

  • They may be crucial to the success of your business.

Good employees should be rewarded and pensions are seen as a valuable benefit

  • Ensuring staff are well looked after creates loyalty.
  • Delivering robust benefits for senior employees motivates upcoming talent.

Company pensions help provide financial security in increasingly uncertain times

  • In reality, a pension scheme is no more than deferred salary.

2. The options

All employers will be required to provide an automatic enrolment pension scheme

  • The system of automatic enrolment began in October 2012 and will include all employers by February 2018.
  • Employers must contribute to the scheme for almost all workers unless workers opt out. The rules will eventually set minimum contributions at 8%, with the employer contributing at least 3%.
  • Small firms that currently do not offer a pension scheme will have to begin making payments. Many are expected to use the low-cost, low-charges state-run scheme known as NEST (National Employment Savings Trust).

Companies are no longer required to provide access to a stakeholder pension

  • New employees have no automatic right to a workplace pension scheme unless the company has reached its automatic enrolment staging date.
  • Where an employer already has a designated stakeholder scheme, existing members must be permitted to continue making contributions.

Different types of occupational pension plan are available

  • The most common types of occupational scheme are defined benefit (DB) and defined contribution (DC) schemes.
  • There are a number of supplementary and alternative schemes available.

Additional voluntary contributions (AVCs) allow members to top-up their main pension plan

  • AVCs are DC schemes.
  • There are two types of AVC: an in-house AVC run by the employer; and free-standing AVCs which are run by an external provider.
  • Like other pension contributions, AVC contributions up to 100% of earnings qualify for income tax relief subject to an overall annual allowance of £40,000.

Personal pensions can also be used to top-up occupational plans

  • Personal pensions can also form the main retirement plan.
  • Employer contributions are deductible against corporation tax.
  • Group Personal Pensions (GPPs) combine individual personal pensions into one plan, allowing for cost efficiency. They operate under the same rules as individual personal pensions.
  • Personal pensions are DC plans which means the individual rather than the employer bears the investment risk.
  • The usual minimum retirement age for personal pensions is 55.

Executive Pension Plans (EPPs) are defined contribution plans provided by the employer

  • EPPs are run by a life assurance company.
  • Employer contributions are deductible against corporation tax.
  • Employees are not liable to income tax or National Insurance contributions (NICs) on payments made to an EPP.
  • Contributions are subject to the £40,000 annual allowance.
  • Members can transfer existing plans into their EPP.
  • The frequency and amounts payable to an EPP are usually flexible.

Self-invested Personal Pensions (SIPPs) are similar to standard personal pensions

  • SIPPs allow greater investment freedom.
  • SIPPs are governed by the same tax, contribution and eligibility rules as personal pensions.
  • SIPP investors can control their investment strategy and hire a fund manager or broker to carry out investment decisions.
  • SIPPs are run under trust law although the member can be the trustee if the plan is overseen by an independent administrator.
  • Administration costs can be high.

Small Self-administered Schemes (SSASs) are occupational plans

  • They are usually made up of directors and senior managers.
  • Set up under trust deed, SSASs encourage greater control over investments and assets.
  • SSASs can be expensive to set up with adviser, trustee and management fees.
  • Employer contributions are deductible against corporation tax.
  • An SSAS can lend money to the employer provided the loan does not exceed 50% of the net value of the scheme's assets.

Pensions salary sacrifice allows employees to exchange earnings for non-cash benefits

  • This means both employer and employee make National Insurance (NI) savings.
  • Employee pension contributions are converted into employer contributions which do not incur NI.
  • The employer can pass NI savings to employees as a bonus contribution to the plan.

Types of occupational scheme

Defined benefit schemes (DB or final salary schemes)

  • DB schemes place the responsibility for funding pensions on the employer.
  • They promise a pension related to earnings at retirement.
  • Employees can hope to retire on two-thirds of final salary, though most will retire on considerably less.
  • The schemes are revalued to ensure they still have enough assets to pay pensions far into the future. Asset values are affected by certain factors, particularly stock market performance.
  • Market volatility, increasing life expectancy and escalating costs have seen private corporate DB schemes disappear as the main form of occupational scheme in the UK.

Defined contribution schemes (DC or money-purchase schemes)

  • DC schemes place the risk of underfunding on the employee.
  • Employees are usually expected to select their own investment strategy for the scheme.
  • Most schemes offer a default which most employees invest in.
  • At retirement, the pension fund can be used to provide a lump sum and/or income.
  • The size of the pension fund will depend on how investments have performed.

Hybrids/Risk Sharing Schemes

  • These are neither pure DB nor pure DC and allow for risk sharing between employer and employee.
  • Hybrid schemes include career-average plans and cash balance plans.
  • Seen as a compromise between DB and DC, hybrids are gaining a place in occupational pension provision but remain the exception rather than the norm.

3. Nearing retirement

A pension pot can represent as much as 40 years of saving, which means the final stages of retirement planning must be executed carefully.

Employees no longer have to retire to claim their pension

  • It will become increasingly common to start drawing a pension while still employed, possibly just part-time.
  • Encouraging senior managers to continue working could benefit your business.
  • Make sure core employees understand the cost of taking benefits early.

By law, you can no longer retire employees at a default retirement age

  • There must be a fair reason for dismissal such as capability or conduct, or the retirement must be 'objectively justified' (which is unlikely in most situations).
  • Employees may choose to work beyond the state pension age (between 61 and 68 depending on their gender and when they were born).

Your options are more limited with a final salary scheme

  • Your only options are to take a tax-free lump sum and an income.
  • The income is guaranteed until you die.

Restrictions on how defined contribution pension funds can be accessed have been removed

  • Members can withdraw lump sums (including a tax-free lump sum of 25% of the total fund).
  • Members can also invest in an annuity or flexible income drawdown plan (or both).
  • Income drawdown plans allow members to vary the timing and amount of withdrawals but do not provide a guaranteed income.
  • Savings left in your pension fund when you die can be passed on in your will.
  • Withdrawing large sums in any one year can increase the income tax rate payable.

Consider offering senior employees a detailed financial review

  • This can help them make the best decisions at the date they choose for retirement.
  • Provide a comparison of options available to senior managers.
  • Make sure all the company pension booklets are up-to-date and available to scheme members.

4. Use advice

You should always seek professional advice when setting up a pension scheme

  • Always take advice when assisting employees in making pension arrangements.

Employers should consider paying for financial advice for employees

  • Pensions advice worth up to £150 a year can be offered as a tax-free benefit to employees.

Ensure that any adviser you use is regulated.

  • Contact the Financial Conduct Authority to check.

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