Executive Pension Plan
An Executive Pension is a pension set up by employers for executives or key employees of the company. The pension is set
up under a trust and typically the employer will act as the trustee.
With an Executive Pension both employees and employers can make contributions.The ultimate value of your pension plan will depend on the contributions you and your employer have made over the years and the investment return the funds have achieved in your Executive Pension.
The advantages of an executive pension planning can be summarised as follows:
- The cost of the director’s pension plan can be borne totally by the company, if desired. There may therefore be no personal cost to the individual in respect of the plan.
- Company contributions to an Executive Pension Plan are normally fully deductible against Corporation Tax.
- There is no benefit in kind for the employee or director in respect of pension contributions paid to the plan by the employer.
- Pension fund growth tax-free.
- 25% of the pension fund tax-free up to a current limit
- Remaining 75% of the fund taken as taxed cash, subject to restrictions
- Availability of the Income Drawdown Option.
- Early Retirement Option from age 50 onwards (subject to certain restrictions).
- Lump Sum Death Benefit may be included under the Executive Pension Plan
- AMRF/ARF attractive method of passing assets to next of kin
In essence the ability through generous maximum funding rates to compress pension funding into a short time frame with full tax relief on contributions coupled with the above listed advantages make the Executive Pension Plan a very attractive preposition to both Director and Company to extract cash from a company