Group Personal Pensions

Group Personal Pensions

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

A GPP is distinguishable from a personal pension plan (PPP) as the charges levied by the provider under a GPP may be lower than under the equivalent PPP.  It is common for a pension provider to offer a reduction in its normal charges as they are dealing with bulk business, hence arranging a GPP can be advantageous to a person who requires charges to be kept to a minimum.

Personal Pension Plan

The Personal Pension Plan (PPP) is an investment available to any UK resident under the age of 75.  The saver will pay pension contributions into a pension fund every month which will be managed by their pension provider, who will in turn invest the money on the savers behalf.  The pension provider can invest in most asset classes including UK and overseas equities, fixed interest, cash and commercial property.

No Guarantees

There are no guarantees of returns on these investments and their value may rise as well as fall.  Returns, as with all investments, are determined by the level of risk and fluctuation that an investor is willing to take in order to pursue the possibility of making a gain.  Accordingly, it is common practice for policyholders to adjust the asset allocation in their investment portfolios so as to lower the risk levels as they approach retirement.  For instance, as retirement nears, stocks and shares can be converted into either cash or fixed interests such as government bonds.

Amount Payable

The amount of pension payable when the policyholder retires is determined by:

•             The amount of money paid into the scheme

•             How well the investment funds have performed

•             The ‘annuity rate’ at the date of retirement

The advantage of investing your money through such a plan is that your company will have done the homework when picking a pensions provider for you, and with a larger pool of money coming from you and everyone else signed up, the investors have a larger pool of money to invest, opening more doors to possible investment opportunities.

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