Dave Belmont Company Secretary, CODA plc

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Dave Belmont Company Secretary, CODA plc

• ICSA Company Secretary of the Year

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CODA plc

• 320 UK staff 550 Worldwide
• Many UK staff not based in an office
• Majority higher rate taxpayers

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Pension Plan
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October 2005

• Three defined contribution schemes
• Three administrators, two trustee bodies,
  two auditors
• Complex and costly to run
• Largest scheme without online access
• As many deferred members as active ones

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New Pension Scheme - Review

• Review by all trustees plus Group FD
• No pre-conceived ideas
• Should be cost-neutral
• objective NOT to save money

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New Pension Scheme The Result

• Group Personal Pension Plan (GPPP)
• No trustees
• No annual accounts/audit
• Policy continues after staff leave
• No deferred members
• Unaffected by corporate reorganisation
• Used Hargreaves Lansdown and Friends Provident
• Online access
• Online fund switching
• Dedicated helpline
• Access to 100 investment funds with a default
  option!

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Two drawbacks of GPPP

• Too much paperwork
• Employee contribution paid AFTER tax at basic
  rate
• Higher rate taxpayer needs to reclaim tax from
  HMRC

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Quick Example - 200 contribution per month
Traditional scheme
GPPP
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Salary Sacrifice

• Employee agrees to reduce his/her salary
• Reduction in salary is paid as an employer
  pension contribution
• Two results
• Highest tax relief claimed through the payroll
• Savings in Employee and Employer NI

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New Example - 200 contribution per month
GPPP with Salary Sacrifice
Standard GPPP
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What to do with the Employer NI Saving?

• Employer agreed to principle of no cost/no
  saving
• Higher employer contribution based on NI saving
• Original employer contribution 6.75
• Minimum employee contribution 3.25

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Staff Communication - Messages

• No worries - Trustees agree
• Scheme is better
• Web access
• Your money
• Improved company contributions
• The directors will be members

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Staff Communication - Delivery

• Letters, emails and intranet
• Do it yourself spreadsheets
• Presentations at offices
• Webex presentations to non-office staff
• Individual consultations
• Dedicated helpline
• Staff could join by
• Form
• Internet
• Telephone

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Result

• 79 of staff pay more than minimum contribution
• 77 of staff pay exactly to the trigger points
• 97 agreed to use salary sacrifice
• I believe the new GPPP scheme takes the best
  features of the oldschemes, and adds a host of
  invaluable benefits founding Trustee, original
  CODA Pension Plan
• Finalist in Professional Pensions awards (DC
  scheme) only GPPP included
• Shortlisted for three Employee Benefits awards in
  June

Why doesnt everyone do this?
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Be Aware

• Restrictions on staff reducing contributions
• Need to retain notional salary
• Salary sacrifice affects low paid staff,
  maternity pay and some benefits
• Recommend you take specialist advice
• - eg PES Employment Specialists, Bristol

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A benefit at no cost to the company
Share Incentive Plan
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CODA Share Incentive Plan

• Allows staff to buy CODA shares
• up to 1,500 worth in tax year out of pre-tax
  income
• Maximum contribution 125 per month
• but will allow lump sums
• Employee needs to retain shares
• for 5 years for full benefit
• Employer can give shares
• for example, 1 free for 3 bought by employee

25 of CODA staff joined in the first month
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No Cost??????

• Employer saves NI on contributions
• Yorkshire Building Society
• very good value
• NI savings should outweigh running costs after
  Year 1
• Gifting shares is not free

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What does the future hold?

• Ive no idea
• Use it while you can
• Build in a get out

The company contribution is dependent upon the
National Insurance saving CODA receives through
salary sacrifice.CODA reserves the right to
revert to a flat contribution rate of 6.75 if
this saving should be lost in the future.
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Conclusion

• Pension Scheme
• Share Incentive Plan
• Cycle Scheme
• Childcare Vouchers

Providing additional staff benefits at no cost