Your pension type

Ever wondered what the difference is between a Defined Contribution and a Defined Benefit pension? 

Although they are different, they have some things in common, let’s take a look.

Auto-enrolment 

Your employer must enrol you on to a pension scheme by law, but you can opt out if you want to.

Employer contributions

Your employer must contribute to your pension, usually a minimum of 3%.

Tax relief

You don’t pay tax on your pension contributions. Every £1 you pay in only costs you 80p.

Invested

Your contributions are invested to give them the best chance to grow.  

Now let’s see what sets them apart

A Defined Benefit pension also known as a DB pension is based on how long you have worked for an employer and how much you earn while you’re there. It gives you a guaranteed income for the rest of your life when you retire – a bit like a salary.

A Defined Contribution pension also known as a DC pension is based on how much you and your employer contribute and how well your investments perform. 

If you have a DC pension the amount of income it will provide you with when you come to retire is not guaranteed.

It’s important to work out how much money you need to save to ensure it provides you with the future lifestyle you want.

And when your ready to start accessing your DC pension there are a number of different options  to choose from.

If you don’t know what type of pension you have, your employer can let you know.

It maybe that you have both types, we call this being a hybrid member.

Managing your pension online

You can manage both types of pension online 24 hours a day, 7 days a week.

Use DB Online if you have a DB pension.

Update your details.

View your scheme record. 

Submit an enquiry.

See your payslips, P60 and more.

Use the Retirement Savings Account if you have a DC pension.

Check your pension value.

Change your contributions.

Estimate your retirement income and more. 

Want to know more?

Visit our DB and DC member pages to learn how to get the best from your pension.