Defined Contribution and Defined benefits!!!

yostv

Im very sorry about the last 2 thread that i have posted, as im new to pensions.

I have done some research on this Defined Contribution and Defined benefits, but still getting no idea what it means, people are saying that there are current problems in the private sector. So any info is very helpful.

Many thanks to all of those replied in my last 2 threads.:rotfl: :rotfl: :rotfl:

dunstonh

Defined Contribution

Where you pay a fixed amount per month (could be x% of salary or £x pm) and that money buys investments. Most commonly unit linked funds. These are subject to investment returns depending on where you invest. Nowadays there is an almost limitless range of options on where to invest as long as its conventional (i.e. not the 3pm at Newmarket or some mortgaged buy to let scheme).

Defined benefits

Where the pension income in retirement will be based on your years of service and pensionable salary. No investment element applies to the individual although the scheme will have money invested.

people are saying that there are current problems in the private sector

No more than you usually see when the markets take one of their drops (which occur on average once every 7 years). This sort of media coverage gets dusted off each time it happens. When the stockmarkets go up then the problems go away again mostly. That said, defined benefit schemes are getting more and more expensive to maintain and many companies are closing them for new entrants (most common) or even closing them altogether. They tend to be replacing them with defined contribution schemes.

yostv

dunstonh wrote: »

Where you pay a fixed amount per month (could be x% of salary or £x pm) and that money buys investments. Most commonly unit linked funds. These are subject to investment returns depending on where you invest. Nowadays there is an almost limitless range of options on where to invest as long as its conventional (i.e. not the 3pm at Newmarket or some mortgaged buy to let scheme).



Where the pension income in retirement will be based on your years of service and pensionable salary. No investment element applies to the individual although the scheme will have money invested.


No more than you usually see when the markets take one of their drops (which occur on average once every 7 years). This sort of media coverage gets dusted off each time it happens. When the stockmarkets go up then the problems go away again mostly. That said, defined benefit schemes are getting more and more expensive to maintain and many companies are closing them for new entrants (most common) or even closing them altogether. They tend to be replacing them with defined contribution schemes.

Mant thanks....problem sorted :rotfl: :rotfl: