Group Pension Policy

A group personal pension plan (GPP) is a collection of personal pension plans (PPPs) provided by an employer for its employees.

It is essentially an investment policy that provides an income in retirement. It is available to any UK resident who is under 75 years of age and can be bought from insurance companies, high street banks, investment organisations and some retailers (i.e. supermarkets and high street shops).

The policyholder contributes to the plan, the money is invested and a fund is built up. The amount of pension payable when the policyholder retires is dependent upon:

• the amount of money paid into the scheme;
• how well the investment funds perform; and
• the 'annuity rate' at the date of retirement. An annuity rate is the factor used to convert the 'pot of money' into a pension.

The policyholder can retire at any age after age 55 (subject to plan restrictions). When the policyholder does retire, they can generally take up to 25% of the value of their fund as a tax-free lump sum. The remainder of the fund can be used to buy an annuity with an insurance company.

What distinguishes a GPP from an individual personal pension plan (PPP) is that the charges levied by the provider under the GPP may be lower than under the equivalent PPP. The provider, because they are dealing with bulk business, may be able to offer a reduction in their normal charges.

Setting up a Group Personal Pension on Bright Pay

To access this utility, click Employer:

1) Click Add within the Pension Schemes section on the menu toolbar

2) Enter your Employer Contracted-Out Number (ECON) in the field provided at the top of the screen, if applicable

3) Under Name, enter the name of the policy and the reference number provided by the pension company

4) Type of Scheme - select Group Personal Pension (GPP) from the drop down menu

5) Reduction - if applicable, tick this box to reduce contributions by the basic rate of tax

6) Default Contributions - this is optional. Complete this section if you would like to apply default contributions to an employee who is added to this pension scheme. They can subsequently be changed for each employee as required

7) Within the Contact and Payment section, enter the contact details of the pension provider

8) Under Payment, select the method of payment for remitting the pension contributions to the pension provider. If the method of payment is credit transfer, enter the pension provider's bank account details accordingly. A bank payment file facility is available within Payroll for the payment of pensions to the pension provider

9) Click Save

Applying the Pension Scheme to an Employee

To apply the pension to an employee click Payroll and select the employee:

TO ENTER A PENSION DEDUCTION BY AMOUNT:

1) Under Additions & Deductions click the Add icon

2) Under Deductions > Pension, select the GPP pension scheme

3) Select the £ sign from the drop down menu and enter the Employee Contribution

4) Select the £ sign from the drop down menu and enter the Employer Contribution, if applicable

TO ENTER A PERCENTAGE-BASED PENSION:


1) Under Additions & Deductions click the Add icon

2) Under Deductions > Pension, select the GPP pension scheme

3) Select the % sign from the drop down menu and enter the Employee Contribution percentage amount

4) Select the % sign from the drop down menu and enter the Employer Contribution percentage amount, if applicable

Remitting the Pension Contributions to the Pension Provider using a Bank Payment File

To access this utility, click Payroll > Pay > Pay Pension Schemes:

1) Select the employees you wish to include in the bank payment file

2) To create the Bank Payments File, click Create BACS File

3) Select the Bank Account you wish to pay from and select the appropriate bank File Format

4) Click Save As to save the bank file to a location of your choice. The bank payment file is now created and can be uploaded through your bank facility when ready.

5) To print the Pension Payment Report, simply click Print

6) To export the Pensions Payment Report, click Export (the report can be copied to Excel, CSV, XPS or copied to clipboard.)