Group Pension Schemes
A Group Pension Scheme is a pension arrangement set up by an employer to provide retirement and/or other benefits for one or more employees. A Group Pension Scheme must be approved by the Revenue and must be set up under an ‘irrevocable trust’, (i.e. trustees hold the scheme assets separate from the employer’s assets). These Schemes are also often referred to as ‘Occupational Pension Plans’, ‘Company Pension Plans’, ‘Retirement Benefit Schemes’, ‘Executive Pension Plans’ and ‘Directors Pension Plans’.
The two main types of Group Pension Schemes are as follows:
- A Defined Contribution Scheme is where the employer and employee agree to contribute a certain amount to the scheme to provide retirement benefits for the employee. Retirement benefits are dependent on the level of contributions paid and the fund performance.
- A Defined Benefit Scheme is where the Scheme promises the employee retirement benefits related to their earnings at retirement.