Pensions

Company Pensions Frequently Asked Questions

Are we obliged to set up a pension scheme for our employees?

You are not obliged to contribute to a pension scheme on behalf of your employees but with effect from 15th September 2003 you will be obliged to provide access to at least one Standard PRSA (Personal Retirement Savings Account) to such employees as outlined below and to provide payroll deduction facilities for them.

Your employees must be allowed access to a PRSA if:

• You do not currently have a pension scheme in place; or
• You have employees that are not included in the pension scheme; or
• You have imposed a waiting period for membership of 6 months or more; or
• You do not allow employees take out an AVC plan (within the scheme rules).

These rules apply to all employees, including temporary and part-time regardless of numbers of how small the workforce is.

We'd like to pay into a pension scheme for our employees but have no expertise. What are our options if we don't want to be trustees?

You have the option of appointing independent trustees to act on your behalf. Meritas has a trustee company which can act for you in this capacity. Setting up a company PRSA scheme, however, has become the route of choice for most companies in recent times principally because there is no requirement for trustees and because the employees get the benefit of ARF options. Additionally you do not have any responsibility regarding the investment choice and performance of the PRSA fund(s). Where there are key staff for whom the contribution limits under PRSAs are too restrictive then individual non PRSA pension arrangements can be established for them separately.

What do companies contribute on average on behalf of employees?

There is a wide variation across different sectors but there is evidence that the average contribution rate is 7% of salary plus the cost of insuring death and disability benefits on behalf of members. The Irish Association of Pension Funds carries out a survey every few years and the recent report in 2007 demonstrated an upward trend in terms of contributions since its previous survey in 2002. The following table is extracted from that report:

Why would we use a pension consultant like Meritas rather than going directly with an insurer?

Insurance companies provide the compliant structures so that contributions can be invested and ultimately the benefits can be paid out. Their specialisations are in the fields of investing and processing.

At its simplest, what you get from Meritas is an effective buffer between you and the institutional apparatus. Our role is to act on your behalf as a partner

• in achieving best value for money,
• in acting as experts for your HR in terms of employee benefits,
• in monitoring, analysing and reviewing investment performance
• in managing the day-to-day member queries
• in providing a comprehensive communications service to members including annual clinics
• in keeping the Company/HR/Trustees abreast with legislation changes
• in liaising with the insurers on all aspects of the scheme management
• in handling claims on your behalf from instigation to payment
• in ensuring everything runs smoothly with the minimum input needed from you.

Our experience and expertise in dealing with all aspects of employee benefits has been gained working with companies of all sizes over many decades. Equally we have developed our professional qualifications through education in pensions, taxation and investments as well as personal financial planning. Finally, in terms of cost, it will typically cost the same or less than dealing directly with an insurer because of the way their products are structured.