| For any company looking at setting up a pension scheme, the market appears confusing and complex. But provision of a pension scheme motivates and keeps staff. It's the second most valued benefit – after pay of course! And, with personal pension scandals still fresh in the memory, corporate provision of this core benefit is especially valued. Because pension schemes don't have the instant, flash appeal of a material perk – a company car, say – it's crucial to communicate the high financial value of this benefit to staff once you have a system in place. It's important to make absolutely clear that employees get much more out of this benefit than they put into it. Generally speaking, if schemes are easy to understand, employees are more likely to value them. There are two types of pension scheme - contributory, otherwise known as money purchase schemes, or non-contributory (final salary) schemes. Money purchase schemes are more common nowadays and are dependent upon investment returns, contributions and annuities. The final pension sum is dependent upon the contributions invested and the employer contribution is fixed. Hence the scheme member, rather than the employer, carries the financial risk. Under such a scheme, employees are not penalised for early departure, since their accounts remain invested within the scheme. In the latter category, the benefits are not dependent on investment returns but instead are defined as a percentage of final pensionable pay. Non-contributory schemes are set up so that the employer takes the financial risk, and is required to make the necessary contributions to meet the shortfall between employee contributions and the final pension sum. Under such a scheme, early leavers may lose out as benefits are linked to prices and not to earnings. The option you choose will depend on your company profile and culture. If your organisation has flexible working arrangements, involving part time or contract work and career breaks, a money purchase scheme is easier to administrate and of greater benefit to employer and employee. If your company chooses to reward long service, a final salary scheme would be more appropriate. On the other hand, if you want to attract mobile staff and encourage a high turnover rate, a money purchase arrangement is again more useful. For small and medium sized companies, the easiest option is a Group Personal Pension - simple to set up and operate, with most of the admin carried out by the nominated insurance company. Group Personal Pensions can take a matter of weeks to set up, with costs starting at around £2,500. Effectively, all the company needs to worry about is getting the funds to the insurance party. If you are already set up with a BACS system, this is easy. | 
