‘Our Wealth Managers and IFA Newcastle team can work with your Company, helping to protect the future of your business and those that you employ. Whether advising on existing employee and Director benefit packages, implementing additional benefit packages or providing Tax planning services, Seven Bridges IM will help provide the solutions that are right for you and your firm.’
There are many provisions that can be made for Corporate firms to both protect and enhance benefits for an employer and their employees. Whether this provision is a legal requirement or a form of prudent wealth preservation, Seven Bridges IM will work with you holistically to provide a list of solutions to suit you and your firm and regular reviews will enable you to closely monitor these provisions on an ongoing basis.
Corporate pensions are a formal arrangement between a company and it’s employees, that provides funding for an employee’s retirement. This ‘pool’ of funds can be financed in several ways and will eventually be used to make periodic payments to retired employees. In most cases, both employer and employee make regular contributions to the plan.
Two of the most common corporate pensions are defined benefit and defined contribution. With defined benefit plans, employee benefits are calculated according to a formula, usually based on duration of employment and salary history, and it’s the employer’s responsibility to fund the plan. Defined contribution plans, on the other hand, offer no guarantees on the amount of benefit that an employee will receive. The benefits on retirement rest solely on the success of the investment and contributions paid throughout the plan. As no guarantees are required many employers are now changing their pension plans from defined benefit to defined contribution.
There are a number of investment vehicles available to corporate investors. Some of these are ‘open ended collective investments’, which place the cash of many investors in to one fund, a ‘pooled fund’. Some have been set up to invest in the shares of various companies and allow the investor to spread the risk, normally associated with single share investing.
It is important to remember however, that all investments carry a degree of risk and the level of risk which you are prepared to take, together with your required or expected returns must be carefully considered prior to investment. The reward for taking higher risk may be the potential for a greater investment return however, as with all investments, you could lose some or all of your investment funds. Building an investment portfolio must take in to account this attitude to investment risk, together with a view on opportunities and implications and your eventual need for income, growth or a combination of both. Wealth creation and management is an ongoing process and we will meet regularly to review this.
Life insurance policies taken out by an employer on the lives of their employees to whom the company considers of vital importance to its operations, are usually transacted and paid for by the employer, with the sum assured being paid to the employer in question on the employee’s death.
There are several reasons why an employer would take out a life insurance policy on their employees. For one, tax free proceeds that are received after death can be used to cover any costs that may arise when hiring that employee’s replacement. The policy can also be used to cover employee benefit liabilities and the proceeds on death are usually paid to the employing company. Corporate life insurance policies can work for business partners too, where one business partner purchases a policy to insure against the financial loss that may occur on death of the other partner, or to buy shares or the remainder of the business from the deceased’s beneficiaries. There are several insurance policies available to corporates in addition to the above, including Private Medical Insurance (PMI), and any form of corporate protection could help to protect and maintain your business.
Tax can be a substantial cost to profitable companies and it can therefore pay to take a little time to consider whether you are able to legally minimise your liability to this cost. All companies aim to earn profits, and in planning for this it would not be wise to disregard the consequences of tax.
When looking to make major business decisions most Directors will seek guidance on tax issues, however almost all transactions could carry tax consequences and therefore advice should be sought as a matter of routine. For most owner-managed businesses the most practical way of achieving this is to have a pre-yearend review to source potential opportunities to minimise tax, defer tax or bring a proportion of the tax forward if that will result in profits being charged at a lower tax rate. A pre-requisite for a full planning exercise is a set of up to date and reliable management accounts, ideally with financial projections indicating the likely trend of future trading and proposed purchases or sales of fixed assets, but even where this information is not available or complete a review can still generate valuable benefits to the company.