Group Pension Plan

Disadvantages Of Privately Administered Schemes
Most employers of labour prefer to avoid strain and complications associated with a privately administered pension scheme. The main disadvantages of a privately administered scheme include :

• Recruitment of personnel to perform the everyday administrative and management of the Scheme. This increases personnel cost;
• Employment of specialist advisers such as Accountants, Investment Analysts, Actuaries etc,also adds to the cost.
• Narrower investment opportunities because of the smaller size of the scheme's funds when compared with the pool of various funds available to an insurance office for investments;
• The temptation of the organisation's Management or Board of Directors using the fund to bail their organisation out of financial problems;
• Mismanagement of the fund due to lack of knowledge of the intricacies and laws guiding the operation of money and capital markets generally and the investment of Pension Funds in particular. This is to the detriment of the company and employees' interest and may result in strained labour relations, increasing crisis of confidence and trust between employers and employees and consequently, labour disputes.

In addition:

• There is high risk of sharp fluctuations in cost due to unexpected rate of withdrawals, deaths etc or adverse investment results.
• Where the organization suddenly finds itself going into liquidation, either voluntarily or as a result of imposed statute, existing members' full benefits are not guaranteed.

Advantages Of Insured Schemes
Employers of labour, both in the private or public sectors now appreciate the advantages of insuring their Staff Gratuity and Pensions Schemes with reputable insurance companies such as IGI. Our insured Staff Gratuity and Pensions Scheme is provided under a collective group or master policy whose wordings are devoid of unnecessary legal and technical terminologies.

For top executives, the benefits secured may also be provided under individual policies incorporating nominated beneficiaries. In either case, the IGI insured staff retirement benefit scheme confers the following advantages:

• Employers are relieved of the high cost of administering the scheme. IGI administers the Schemes at no cost whatsoever to the owners;
• Employers are relieved of the liability of paying the benefits due under the Scheme as IGI provides guaranteed benefits;
• IGI ensures that the scheme's approval is processed promptly with the Joint Tax Board to enable the employee's and employer's contribution qualify for tax exemptions whilst the cash benefits due to members will also be tax free;
• The large size of IGI's pool of Life and Pensions funds combines with the large number of employees on the scheme to allow for lower risk fluctuation in cost resulting from unexpected variance in mortality or investment results;
• IGI enjoys very wide investment opportunities as larger funds emanating from various sources are pooled together;
• Employees have a greater sense of security and assurance that payment will be made when they have the knowledge that the assets of the Scheme are separated from the finances of their employer and invested with a reputable insurance company such as IGI;
• IGI guarantees that expert advice will, from commencement of the scheme, be provided on documentation, data collation, actuarial services at minimal cost and day-to-day administrative problems;
• All IGI insured retirement benefit contracts yield profit to the insured and provide annual addition of guaranteed interests or reversionary bonuses arising from capital appreciation on our company's vast investment portfolios.

Financing The Scheme
The scheme may be fully financed by the employers. This system is known as Non-Contributory Scheme. On the other hand the financing may be the joint responsibility of both the employers and the employees, a system known as Contributory Scheme. The main features of the contributory scheme is the enhancement of the employee's contribution, and the level of benefits and to ensure adequate participation of employees in the fund's management decisions. We would advise that your staff be convinced through enlightenment to contribute towards their own deferred remuneration which staff Gratuity and Pensions Scheme is. However, whilst the present Scheme of the Government is non-funded and non-contributory, IGI is in a position to quickly respond to the Contributory Scheme whenever it is introduced.

Past Service Benefits
At the point of setting up the scheme some employees may have already put in a significant period of service with the organisation. It is essential that provisions be made to give such category of employees their entitlement for past service already rendered.

The benefits for past service are usually tied up, among other factors, to the number of years of past service already completed before the commencement date of the scheme. Where this is desired, IGI will provide flexible facilities for the one-and-for-all premium payable to be spread over a number of years (say 2 - 5 years), if the amount involved is substantial.

Investment Vehicles Of The Fund

Endowment Assurance/Deposit Administration Plan
Under this arrangement, the whole of the employee's contributions and part of the employer's contributions are invested in our IGI ROBUST FUND which is managed as Deposit Administration. With this, the security and rapid growth of the scheme's assets are guaranteed. (The full operation of the IGI ROBUST FUND is explained below) The balance of the employers' contributions is employed in the purchase of Endowment Assurance Policy similar to the one discussed previously.

Deposit Administration Plan
This Plan is the hallmark of IGI's retirement/death-in-service products. A pool of funds code-named the IGI ROBUST FUND is established along the lines of deposit administration. Contributions made in respect of each scheme and placed with IGI are pooled into this ever rapidly growing fund which is accumulated with interest. Depending on the individual's contribution, a minimum annual interest rate is guaranteed at the inception of the scheme or its anniversary. At the end of each year, an Actuarial Valuation of the fund is carried and based on the actual yield derived from the investment of the fund, Bonus Interest may be added to the guaranteed interest.

One of the cardinal principles of a deposit administration plan is that sufficient resources must be invested to meet the staff Retirement/death-in-service Scheme's accrued commitments. Where benefits need to be paid to the members, an appropriate amount is withdrawn from the cash accumulation.

Special Schemes
On request, IGI can design pensions and/or Gratuity Plans specailly customised for an organisation which are different from the options discussed above.

Examples of such customised scheme includes

The Flat-rate scheme

Average earnings schemes

IGI's team of professionals are always available to discuss these and other offers with your organization.

Employee Benefits Under A Typical Retirement Plan
This section considers the benefits available to the employee under the various policy options.

Retirement Benefit
Irrespective of the policy option chosen, an employee who retires at the normal retirement age stipulated by the Trust Deed and Rules will be entitled to the lump sum benefits purchased by both his own contributions (if the scheme is contributory) and that of his employer's in additon to the accrued bonuses or interests as the case may be.

Withdrawal Benefit
An employee who leaves service before attaining the normal retirement age will be entitled to 100% of the accumulated value of his own contributions to date. In addition, he may also be entitled to a proportion of the benefits secured by the employer's contribution according to a vesting scale stated in the Trust Deed and Rules of the scheme and, subject to other terms and conditions.

Death Benefit
The nominated beneficiaries of an employee, who passes on whilst a member of the scheme, will be entitled to all the contributions made by the employee before his death in addition to the accrued interests. The total benefits purchased by the employer's contribution will also be paid to the said beneficiaries.

Scheme Administration
As already mentioned, once your staff retirement plan is insured with IGI, your organization is totally relieved of the pains and rigors of administrative costs and procedures. In addition to the free investment services and provision of minimum guaranteed benefits, IGI also renders the following administrative services on retirement benefit plans:

• Advisory services to Employers and Employees,
• Scheme Documentation;
• Issuance of membership certificates;
• Issuance of yearly Financial Statements;
• Preparation of Trust Deed and Rules/Scheme Booklets;
• Liaising with the Joint Tax Board to ensure approval of schemes.

Requirements For Quotation And Recommendation

• Scheme Structure (eg Endowment/Pure Endowment Plan);
• Full names of staff;
• Sex;
• Date of employment;
• Salary/Total Emoluments;
• Rates of contribution: (Employee %, Employer %);
• Commencement Date of Scheme;
• Dates of birth
• Normal Retirement Ages for Male and Female.
• Minimum Age at Entry.

Back to Our Services
For more information, please Contact us