Meaning of "DC"

SallyG

"Crucially, the NAPF reckons that the ABI is getting confused between the DC market (which is growing) and the personal pension market (which is flat)."

Does "DC" always mean an occupational defined contribution pension?
Isn't a personal pension a DC pension?

dunstonh

Does "DC" always mean an occupational defined contribution pension?

No.

Isn't a personal pension a DC pension?

yes.

It is hard to separate. Where would you put a group personal pension. How about individual personal pensions with employer contributions (do loads of those personally).

SallyG

Thanks dh - still struggling to come to terms with the definitions.
Sorry for posting two near-identical posts.
The quotation came from this :
http://www.moneymarketing.co.uk/pensions/paul-farrow-abi-should-not-dismiss-damning-napf-report/1045778.article
Everyone in the pension profession seems to be calling everyone else in the profession mad, bad or dangerous ......

dunstonh

Everyone in the pension profession seems to be calling everyone else in the profession mad, bad or dangerous ......

You tend to find that consumer groups, trade groups and research companies have an agenda (the likes of Which want to sell more subscriptions. Research companies are usually employed by companies who want to find ways to promote their offering and trade groups want to support their trade).

NAPF's webpage contains information which is flawed. So, it is not on any high ground there. It's view of what is DC is a bit like the life assurance vs life insurance and which is correct. Its a bit murky because terminology has gone that way. They are not wrong but they are not right. By saying things like that, they are just being difficult.

That said, if you asked me anecdotally, I would go more with their view that personal pension holders are more likely to use the open market option than occupational money purchase scheme holders. I have come across many occupational schemes that try to get the scheme administrator to do the OMO but charge figures like £600 for doing it (on top of commission or a minimum of £600 if commission doesnt go that far). So, you can imagine that someone getting their paperwork through gets a choice that doesnt cost them (in their eyes) vs an option that costs them £600. They dont think about calling an IFA.

I think there are some providers out there that make open market option difficult. Pru, for example, put a 2 week date on their open market option forms. They also dont send out full fund transfer forms (which is often the method used if you have more than one pension). Some send out their own information but tell you to ask them again if you want to do OMO. It should be automatic that providers supply OMO and full transfer forms automatically. However, whatever the provider does, the choice is still with the consumer and there are plenty out there that go with the easy option rather than the best option.