It's now been over a year since A-day but there are still opportunities to explore and potential pitfalls to beware of.
Registered or excepted?
The new tax regime opens up a wider range of registered and non-registered options.
For the majority of employees, registered group life will still be the most tax-efficient option - and it's the only option if the client wants to offer dependant's pensions. But excepted group life is also worth considering as an alternative for clients who want minimal administration or want to avoid tax consequences for their employees. This will be more of a concern if they have high earners or employees who've registered for enhanced protection for their retirement benefits.
For more information on the key points to consider, read the March edition of focuson employee benefits, our regular technical newsletter.
Making changes
If your client wants to make changes to their current scheme set-up, it's important to follow the correct process, in the right order. This is to make sure there's no break in cover and to avoid any unintended tax consequences.
If a scheme has any members who've applied for enhanced protection, joining a new employer's registered group life scheme will be all that's needed to unravel their pension protection. In the Revenue's eyes, they will have entered a 'new arrangement'. Joining a non-registered group life scheme, by contrast, has no effect.
Trustee reassurance to stand-alone group life
We've all seen the trend for moving pension benefits away from trust-based schemes and into contract-based schemes, such as a group personal or stakeholder pension. If the life cover was previously held under the pension trust, then the client may want to set up a new stand-alone group life scheme to continue cover.
This is effectively a brand new scheme, so you'll need to follow the normal new business application process for registered group life or excepted group life.