PLANNING
Defined contribution
company pensions
A defined contribution, or money purchase, pension scheme is a type of
workplace pension. It is built up through your and your employer’s
contributions as well as tax relief from the government.
Defined contribution schemes give you an
accumulated sum when you come to retire, which you
can use to secure a pension income through buying a
product called an annuity or opt for income
drawdown. Most company pension schemes are now
defined contribution.
Until 2012, you would have been asked by your
employer if you wanted to join the company scheme.
However, from 2012 onwards, automatic enrolment
was introduced, requiring all UK workplaces to enrol
their staff in pensions.
The contributions from you and your employer will
be invested in the stock market and other assets,
with the aim of increasing their value over the years
before you retire.
Unlike those who belong to a defined benefit
pension scheme, members of defined contribution
schemes have a d YܙYHو