BUSINESS owners face many important financial decisions, one of which is choosing the right pension scheme for their company's needs.

Factors to consider include the level of funding they are prepared to contribute, the extent to which employees will need to be consulted and the cost, charges and penalties involved.

Once a pension scheme is selected, it cannot be easily changed, so it is vital that companies make the right decision. Business Link has prepared a guide to support businesses through this process, which is available at businesslink.gov.uk/northeast.

A well established occupational pension scheme can help in attracting, retaining and motivating high-calibre staff because the company is required to make contributions.

Employers also stand to benefit from tax relief and flexibility because the scheme can be tailored and controlled as required.

Occupational pension schemes can be related to final salary and contributions made, or based relatively to the value of the investment fund.

The disadvantage of these schemes is that they are not easily transferable and are governed by complex legislation.

Flexible and easy to understand, stakeholder pension schemes accept low value and irregular payments without penalising the employee.

A business which employs five or more members of staff, and offers no other qualifying pension arrangement, is legally obliged to offer employees access to a stakeholder pension.

An individual with their own personal pension plan can form a group personal pension (GPP) plan. This is a registered pension scheme grouped together by the pension provider.

Staff benefit from lower fees and businesses do not incur administration costs, because these are the responsibility of the scheme provider. In addition, employer contributions are optional.

Offering access to a GPP will exempt a company from the requirement to designate a stakeholder pension scheme, providing they contribute an amount equal to three per cent of employees' earnings and the GPP has no exit penalties.

For more detailed information, Business Link's online guide examines how to tailor a pension scheme and discusses the comparative benefits of each type.

Its team of expert brokers operate across the region in local access points and on a mobile basis.

For information, go to businesslink.

gov.uk/northeast or call 0845-600-9006.