Defined Contribution Pensions
What is a defined contribution pension?
Defined Contribution (DC) or ‘Money Purchase’ pensions are the most common type of pension fund. They usually come in the form of a private pension or stakeholder pension that are either arranged by you directly or through your employer within your workplace pension.
Defined Contribution Pensions
Types of defined
contribution pensions:
- Executive Pension Plan
- Group Personal Pension
- Master Trust Pension (e.g. The People’s Pension, NEST Pension and NOW Pension are popular with auto-enrolment schemes)
- Self-Invested Personal Pension (commonly known as a SIPP)
- Stakeholder Pension
How do defined contribution pensions grow?
A Defined Contribution pension simply put, is a long-term savings account and its growth is directly linked to the amount of funds (contributions) saved, the investment performance of the fund, minus the fees taken by the pension provider. The value of your pension pot can go up and down depending on these investments and fees taken, so it is worth keeping a close eye on how your DC pension fund is performing.