Which document is used to set up a single-employee employer pension scheme with life assurance?

Which document is used to set up a single-employee employer pension scheme with life assurance?

• A. Letter of Exchange
• B. Declaration of Trust
• C. Appointment of Beneficiaries
• D. Form of Indemnity

Answer: (A)

The key idea is how a life assurance policy is incorporated into a one-person employer pension scheme. A Letter of Exchange is the instrument used to formalize the transfer or exchange of ownership rights of a life policy into the pension arrangement, so the policy becomes part of the pension fund rather than a separate personal policy. This document records the terms of the transfer, assigns the policy to the scheme, and clarifies how the policy benefits will feed into the pension benefits for the employee. It provides a clear, auditable way to align the life cover with the pension structure, which is exactly what you need when setting up a single-employee scheme with life assurance. Other documents serve different purposes—such as creating a trust, naming beneficiaries, or providing indemnity—so they don’t accomplish the specific transfer of a life policy into the pension setup in the same direct way.

The key idea is how a life assurance policy is incorporated into a one-person employer pension scheme. A Letter of Exchange is the instrument used to formalize the transfer or exchange of ownership rights of a life policy into the pension arrangement, so the policy becomes part of the pension fund rather than a separate personal policy. This document records the terms of the transfer, assigns the policy to the scheme, and clarifies how the policy benefits will feed into the pension benefits for the employee. It provides a clear, auditable way to align the life cover with the pension structure, which is exactly what you need when setting up a single-employee scheme with life assurance. Other documents serve different purposes—such as creating a trust, naming beneficiaries, or providing indemnity—so they don’t accomplish the specific transfer of a life policy into the pension setup in the same direct way.