Defined Contribution (DC) schemes have been around for a long time but, until relatively recently, these schemes have mainly been used by smaller employers. In recent years, larger employers have been turning to DC schemes as a way to control, or reduce, their pension costs.
In DC schemes, the trustees decide how much, or how little, investment choice to
offer the members. Members bear the investment risk, whereas the employer bears the risk in defined benefit (DB) schemes.
The amount of pension a member receives on retirement depends on their age and sex, the value of their personal fund and the cost of buying a pension.
When they retire, members can tailor their benefits to suit their personal circumstances. For example, members can choose whether to take some of their fund as a lump sum, or convert all of it to an annual pension; they can choose whether or not to provide for a spouse or partner after they die; and they can choose whether or not to have annual pension increases after retirement.
In many DC schemes, the employer’s responsibility for the member stops when
they retire. Pensions are usually bought from an external provider so there is no payroll administration.
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The Flexible Retirement Plan |
The Pensions Trust’s Flexible Retirement Plan is a low-cost occupational money purchase pension scheme designed for the 21st century.
Members have the opportunity to purchase units tax-efficiently in a range of investment funds. For more information on the funds please click here to see the fund fact sheets and to view our unit funds click here.
The employer chooses the rates at which they and their employees will contribute to the Plan. The employer’s contribution is usually at least equal to, or more than the employee’s contribution.
To view the Flexible Retirement Plan DC Website please click here.
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The Pensions Trust’s Ethical Fund |
The Ethical Fund is a unitised fund managed by an external asset manager, investing across a range of asset classes including a mix of UK and overseas equities as well as UK and overseas bonds and gilts, selecting securities on a screened basis with the ultimate aim of:
- investing in companies that make a positive contribution to society;
- using influence as an investor to encourage best practice management of social and responsibility issues; and
- avoiding investing in companies that are harmful.
Both positive and negative screening critieria are applied when selecting individual stocks ensuring the Fund maintains a socially responsible approach to investment.
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For more information about the Ethical Fund please click here. |
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Social Housing Pension Scheme Defined Contribution (DC) Structure |
Our largest multi-employer defined benefit (DB) pension scheme introduced a defined contribution (DC) section from 1 October 2010. Employers can opt to offer the DC Section to their staff instead of the DB Structure. For more information about the DC Section of SHPS please click here.