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Whilst similar to group life cover in that it protects the dependants (or nominated beneficiaries) of an employee, dependants’ pension insurance differs in providing a regular monthly income rather than a lump sum upon their death.

As leading business protection insurance specialists Chase Templeton can offer expert advice on the sourcing and introduction of schemes which are typically tax efficient for both employer and employee.

 

Provides reassurance to your staff and those they care about

 

It’s something none of us like to think about. Not just our own untimely death but the emotional and financial devastation it might wreak upon those we care most about. Whether a chief executive, middle manager or among an army of hundreds or thousands of dedicated staff that keep the wheels of your business well oiled, it’s a worry from which none of us can escape.

 

But it is possible to offer the comfort and reassurance that should the unthinkable happen our loved ones can benefit from a regular monthly income. Dependants’ pension insurance does pretty much what it says on the tin, providing a monthly pension benefit to dependants, a benefit which normally escapes the clutches of the taxman.

 

Indeed like a stick of Blackpool rock it has ‘tax efficiency’ pretty much stamped all the way through it as premiums do not typically burden an employee with a P11d charge whilst qualifying the employer for corporation tax relief.

 

Another key attraction is that they can be exceptionally easy to administer. That’s because defined contribution pension schemes are fully insured which means the burden of administration is shifted from the employer to the insurer. With most schemes not requiring submission of previous medical histories they’re also relatively easy to introduce.

 

What is not so simple is finding the best solution for your business. For that you require the kind of expert, impartial and highly knowledgeable advice offered by Chase Templeton’s dedicated business protection specialists.

They’ll work with you to seek out the most effective and best value solution from the UK’s leading dependants’ pension insurance specialists.

 

Making the right choice

When seeking out the right dependants’ pension scheme for your business you should take a number of factors into consideration. These will include whether you plan the scheme to be universal, with all employees eligible, selective and/or tiered to offer different benefit to different groups of employees. In arriving at a budget think about a cost benefit analysis so that as well as including premiums on your ledger, you look at potential savings if you believe introducing this cover will aid staff retention and help you attract the best and most productive staff.

Things you might want to consider include:

 

  • What level of benefit do you wish to offer? You can select the percentage of employees’ salaries you wish to insure as a dependant’s pension. When doing so think not only of the impact on premiums but the end benefit to a beneficiary – they are course inextricably linked. If, say, you insure at a 30% rate for an employee earning £50,000 the insurer will be looking to cover a sum which includes a “capitalisation factor.” This is a multiple used by underwriters to help calculate the overall cost of risk. So if that multiple was 25 then the total sum insured would be £375,000: £50,000 x 30% x 25. The capitalisation factor will be determined by things such as the age and sex of employees to be covered – so your business’s demographics are important.
  • To whom do you want to offer the benefit? Think about your business objectives and budget. Do you want to protect all or some of your employees? Do you want to offer different levels of benefit to different staff groups? This is possible but bear in mind you must adhere to legislation governing equality, discrimination and unfair treatment eg. part-time, male, female, disabled staff.
  • Do you want to top up the scheme? Subject to HMRC limits it may be possible to “top-up” the insured scheme with your company contributing to the benefit paid. Clearly this requires careful thought.
  • Would you be eligible for corporation tax relief? Usually group dependants’ insurance scheme premiums are deemed a business expense eligible for corporation tax relief. However we would recommended seeking expert advice on your particular situation by discussing this with a qualified tax advisor.
  • What will be your employees’ perceptions? Introducing such cover demonstrates you are a caring employer who places value on the welfare of staff and their families. This could enhance your corporate image and help you both retain and attract the best staff.
  • Could you do more to achieve more? It might be worth considering introducing dependants’ pension insurance alongside other benefits such as group life insurance or as part of a wider employee benefits package. A carefully structured and well administered employee benefits scheme can prove a great business investment!

 

Your dedicated Chase Templeton account manager will be pleased to help you identify key priorities, guide you to the best available solution and provide ongoing support, be that amending your future protection to meet the changing circumstances of your business or helping should any of your staff’s family or dependants need claim on your policy.

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