At a glance
The most important thing to know:
- Defined Benefit (DB): Receive a retirement income calculated in accordance with the scheme rules.
- Defined Contribution (DC): You build up a pension pot, and its value can go up or down.
- Hybrid: Your pension(s) with one provider may include both Defined Benefit and Defined Contribution benefits.
Pension types explained
Watch this short video to see how Defined Benefit (DB) and Defined Contribution (DC) pensions work, what they have in common, and what makes them different.
You’ll learn what to expect from each, and what it means for your retirement.
Transcript
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.
Which type of pension do you have?
Choose your pension type to see the information that’s most relevant to you.
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Defined Contribution (DC)
Learn how your pension pot is built up through contributions and investment returns, how it's invested, and how to manage your savings.
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Defined Benefit (DB)
Find out how your pension works, how your benefits may be calculated at retirement and how to manage your benefits.
FAQs
Do you have a query about your TPT pension scheme? See if our virtual helper PensionBot can help answer your query...
Get in touch
You may not need to contact us directly — many tasks can be completed here or within your online account.
If you do need help, we’ll make sure you reach the right team.
We’re available 8:30am to 5:00pm, Monday to Friday on 0113 234 5500.
Please have your membership number ready so we can help you as quickly as possible.
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