The Value of Retirement Benefits Schemes for Small Business

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Some small business owners may be under the misapprehension that providing employee benefits may present an onerous procedure. However, there are many benefits to benefits, so to speak. And chief among these benefits is the provision of retirement funding for your staff. After all, your employees are your biggest asset, so it makes sense to offer them something that shows you care about them, their families, and their future.

Choices and necessities

Pension fund
A pension fund consists of money contributed by the employer as well as employees to provide a pension upon retirement. Subject to tax, an employee may take up to one-third of their total retirement benefit as a cash lump sum. The remaining two-thirds must be used to provide a pension.

Provident fund
A provident fund is also made up of contributions by both the employer and the employees. The difference being that the employee will receive a once-off payment upon retirement. As with all policies, there are always variations and potential choices available.

Retirement Annuity
A retirement annuity, or RA, is a specialised savings product individually tailored to provide income for an employee’s retirement or as a supplement to his or her pension. It is a staff member’s individual arrangement to protect their retirement and is therefore not part of a group pension plan. At retirement, the contributions the employee has made, plus the accumulated growth from the investment of the policy, are made available to the employee as a third as lumpsum and the remaining two thirds as a pension.

Disability Cover
Disability cover is a protection benefit that can be claimed when either a disabling illness or injury prevent you from working, either for a short time or permanently. There are two types of disability cover benefits: income benefit and lump sum benefit. An income benefit replaces a portion of your income, while a lump sum benefit provides you with a cash lump sum.

It is highly advisable for a small business owner to arrange these kinds of policies for employees. It’s never too soon to set up a safety net for your staff should they be compromised by accident or illness. Providing benefits of this nature is one way of retaining your employees’ services, fostering their loyalty, and showing that you truly appreciate their value in your business.

The value of people in your business

The social contract:
When you own a small business, you invariably get to know your employees on a personal level; they become almost an extension of your family. And it’s this personal relationship that really makes a retirement policy for them so important. Once they retire, it’s good to know you are able to reward them for their loyal service and commitment.

Recruitment and wellbeing:
As a small business, a well-structured employee benefits offering, especially one that includes retirement benefits, will prove an invaluable incentive when recruiting the best persons to contribute to your business. They will be aware that their welfare is important to you.

Motivation, productivity and turnaround:
There is no doubt that employee benefits with a focus on a good retirement pension policy is both attractive and motivating to employees. When staff know that you care and you have taken preparations to secure their future, they will return the favour by applying drive and energy to your business, thus contributing to greater efficiency, productivity, and ultimately profits.

Tax advantages:
Setting up retirement funding for your staff, reduces tax on your business. Their contributions will also provide them with tax relief as well. These days there are broader choices for staff – especially if you are a small business owner – and you can work with employees to ensure that they are informed and perhaps assisted to set up their own individual retirement funding if they so wish, and to which you can arrange to contribute as a tax reducible factor.

Employer branding:
Whichever way you look at it, retirement benefits make absolute sense in all scenarios. Currently, they are in high demand from employees, even among younger workers. A competitive benefits package in a small business represents a caring employer who wants to work with the best, and reward their contributions with real value. There can be no better way of doing this than by helping them to invest in their financial futures.

Empfin Solutions – the team that keeps your team happy

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Your Company Benefits – advising on, and servicing umbrella pension and provident funds.
Your Personal Financial Planning and Provision – Estate planning, Wealth Creation and Retirement Planning.
Your Assets – motor and household insurance.

Always striving to be a trusted partner in facilitating financial solutions for organisations and individuals, our dedicated team of fully accredited, experienced professionals have a passion for satisfying customer needs and providing a truly client-centric service.

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