A group personal pension plan (GPP) is a collection of Personal Pension Plans (PPPs) provided by an employer for its employees.
A PPP is a type of defined contribution arrangement.
It is essentially an investment policy that provides an income in retirement. It is available to any UK resident.
The policyholder contributes to the plan, the money is invested and a fund is built up. The amount of pension payable when the policyholder retires is dependent upon:
- the amount of money paid into the scheme;
- how well the investment funds perform; and
- the 'annuity rate' at the date of retirement. An annuity rate is the factor used to convert the 'pot of money' into a pension.
The policyholder can retire at any age after age 55 (subject to plan restrictions). When the policyholder does retire, they can generally take up to 25% of the value of their fund as a tax-free lump sum. The remainder of the fund can be used to buy an annuity.