MyCompanyPension.co.uk - Helping members of occupational pension schemes to better understand their benefits.

23rd October 2017
:: Scheme Member | Is your scheme Defined Benefit or Money Purchase?

Is your scheme Defined Benefit or Money Purchase?
 
Here’s a very quick definition of defined benefit and money purchase schemes. For more detail, we strongly recommend you read our Factsheets:
What is a Defined Benefit Scheme? and What is a Money Purchase Scheme?
 
 
  Defined Benefit
A pension arrangement that provides specific benefits on the retirement of its members from an occupational pension scheme that are based upon salary and service.
 
'Final Salary’, 'Salary Related’ pension schemes and 'career average schemes (CARE)' are all types of defined benefit schemes. 
 
 
 
 
  Money Purchase
A pension arrangement where the pension benefits at retirement are determined by agreed levels of contributions paid into the fund by the member and employer. They are often called defined contribution schemes. They provide benefits based upon the money held in individual ‘pots’ specifically on behalf of each member. The amount in your ‘pot’ at retirement will depend upon the investment returns achieved on the member and employer contributions.
 
See our Glossary for definitions of phrases in our Factsheets
 
 
 
 
 
 
 

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