Trusts

Pension trust

All companies are able to create a pension trust. There are several alternatives available. A pension trust has to be crated to the benefit of someone that is employed. The trust needs to cover all employees in the company. A pension trust may not be used by a company without shares or a partnership company, if such companies are not owned by an AB-company where the beneficiaries are employed.

A pension scheme is a long term promise where the capital shall be invested in a prudent way to be able to honour the agreements far into the future. The comfort of knowing that the pension pool is well managed and growing is central for both employers and employees. The advantage of placing the pension pool in a trust is that the flexibility and control of the funds is increased. When managing the pension funds it is important to consider the inflation effect, which otherwise would eat into the spending power of the retirees to be.

When managing pension funds it is important to have a very long horizon, and diversify the investments both over time and between asset classes, to be able to generate a real return.

The starting point for all saving and investment is to determine the investment horizon and the level of risk your company is willing to take, to be able to generate a decent return within the pension programme. These foundations can change over time as the company might be sold whole or in parts, if there is a succession or the capital structure of the company is changed. Events like these can alter the pension program.

Return trust

A Return trust is created by gift or will and the return from the assets are used to fulfil the purpose of the trust.

Profit Share Trust

The result of a company is dependent on the efforts of its employees.  A Profit Share Trust is an incentive programme that gives employees a share of the value created. Obviously this forges a stronger link between the goals of the company and the daily work of the employees. A Profit Share Trust normally increases the commitment and loyalty in a company. The tax rules are favourable for this kind of structure.