What is a Group Personal Pension?

A Group Personal Pension (GPP) is a type of workplace pension scheme arranged by an employer but set up as a collection of individual personal pension plans for employees.

Unlike an occupational pension (where the scheme is set up and managed by an employer, usually with third party trustees), a GPP is set up and managed by a pension provider which is selected by the employer for its employees.

What are the key features of a GPP?

The key features of a GPP are:

• Personal ownership: Each employee has their own individual pension plan, even though it's arranged through their employer, under a "group" arrangement
• Portability & Flexibility: As the pension plans belong to each individual (rather than the employer), the plans stay with the employees if they leave their current job. Even after they leave, they can make transfers into their plan from other pension plans they hold and they may be able to make their own contributions directly into the plan
• Contributions: Both the employer and employee can contribute to the plan. Employee contributions are usually deducted from the employee’s salary
• Tax Benefits: Contributions made through employers’ payroll normally receive tax relief at source, and investment growth is tax-free. Contributions made directly by the member are usually eligible to claim tax back on them
• Investment Options: Employees can usually choose from a range of investment funds selected and offered by the pension provider

What is the role of the employer in a GPP?

The employer arranges which GPP their employees join but does not govern or control it. In that respect, employer representatives do not act as trustees and have no fiduciary responsibility for the plan’s management.

Employers are, however, responsible for the following:

• Employee Contributions: Facilitating employee contributions via payroll deductions, where relevant
• Employer Contributions: Contributing to their employees' pension plans per their employment contracts (usually a certain percentage of the employee’s salary)
• Contribution Payment: Paying these contributions, with supporting files, in a timely manner, to the pension provider for them to invest accordingly
• Employee Support & Engagement: Supporting employees to enrol in the GPP and working with the pension provider to promote staff engagement with the scheme
• Working cohesively with the pension provider: Providing accurate and timely information about members (for example leavers, joiners, salary changes, maternity leave, tax reference changes, sabbaticals, name changes etc.)

What is the role of the pension provider in a GPP?

In the capacity of plan administrator and trustee, the pension provider is responsible for:

• Compliance: Ensuring compliance with pension regulations as well as AML/CFT/CPF compliance and regulatory reporting
• Scheme Governance: Safeguarding assets, scheme investment governance and acting prudently, responsibly, honestly & impartially, in the best interests of scheme members/beneficiaries and in line with GPP Trust Deed & Rules (TD&R)
• Reporting: Reporting investment performance, reconciliations and contributions as well as preparing and submitting Annual Reports, Financial Statements & other regulatory reporting/interactions
• Record Keeping: Member record-keeping as well as maintaining books & records of transactions and payment schedules
• Benefit Payments: Calculating, authorising and processing member benefit payments and transfers-out
• Tax Payments: Deducting and arranging payment of tax due to tax authorities
• Trustee Decision Making: Exercising discretionary decision-making powers in a fair, reasonable, diligent and professional manner
• Member Support: Supporting members in making informed decisions, dealing with member queries and delivering clear member communications in respect of the GPP
• Investments: Selecting a range of investments for the members to choose from and ensuring they are performing in line with expectations

What is the role of the member?

The employee is the member of their own personal pension plan within the GPP.

They are responsible for:

• Investment Choice: Selecting their preferred investments from a range of investment funds offered by the provider and making any changes when they deem appropriate (with the initial selection and any subsequent changes often following the support/advice of a licensed financial adviser)
• Investment Monitoring: Monitoring the performance of their pension fund
• Accurate Information: Updating the pension provider in a timely manner when there are changes to their personal details, circumstances, and keeping their Expression of Wishes up-to-date
• Contributions: Any decision to increase, decrease or stop their personal (member) contributions (subject to the GPP rules and employer requirements)
• Transfers in: Transferring other pension arrangement(s) into their pension plan 

In Summary

A Group Personal Pension (GPP) offers a flexible and portable retirement savings solution that benefits both employers and employees. While employers play a key role in establishing the GPP with the pension provider and facilitating contributions, each employee has responsibility for decisions in respect to their individual pension plan. The pension provider oversees the administration and governance of the scheme, ensuring regulatory compliance and deciding which investment funds are available to members.

For employees, understanding their responsibilities, especially around investment choices and personal tax reporting, is essential to maximising the benefits of a GPP. With clearly defined roles and responsibilities, GPPs provide a robust framework for long-term financial planning and retirement security.

 Learn more about Boal & Co’s Isle of Man Group Personal Pension, Rewards