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Cimps could be viable option to stakeholder

Pension experts believe contracted-in money-purchase schemes could become

a viable alternative to group personal pensions and stakeholder for

employers.

They predict new pension rules could lead to occupational schemes

reversing the trend of recent years, which has seen many occupational

schemes switch to group personal pensions, especially for employers with

large staff turnover.

Under new Government rules, all employers with over five staff must offer

some form of pension. For many, Cimps will be an attractive way of meeting

these obligations.

Part of the attraction of Cimps over stakeholder and group personal

pensions is they do not have to allow access to employees until after 12

months&#39 service. This compares with three months for stakeholder and GPPs.

If an employee leaves the scheme within two years, the employer need only

repay the employee contributions. With GPPs and stakeholder, the employee

also gets the employer&#39s contributions.

Employers&#39 contributions can be lower under Cimps than the 3 per cent

under stakeholder.

Technical Connection pensions consultant John Page says: “There are

reasonable arguments for Cimps. Although GPPs still have an advantage over

occupational schemes following the 1995 Pensions Act, this has gradually

been eroded.”

Scottish Equitable pensions development manager Steve Cameron says: “This

is something for IFAs to consider. It is not an unattractive route.”

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