Pensions

Question 1

Defined Benefit Scheme (DB)

Answer 1

ER guarantees specified pension on retirement.
Calculated using ‘accrual rate’:
-Final Salary
-Career Average

Question 2

Defined Contributions Scheme (DC)

Answer 2

Contributions by ER + EE are defined
Money Purchase Schemes

Question 3

DB: Final Pension value depends on

Answer 3

-inflation
-Investment performance of assets
-Accrual rate
-Final pensionable earnings of each member
-Length of the members pensionable service
-Membership profile of the scheme

Question 4

DC scheme level of final benefit depends on

Answer 4

-Amounts contributed
-Investment returns
-Charges levied
-Cost of annuity