Defined Contribution Pension

Defined contribution pension is the most common type of pension available in the UK, and are used for workplace pension schemes and for personal pensions. DC pensions involve saving up a pot of money over many years, to be held in investments until you reach your chosen retirement age (55 or over).

The value of your Defined Contribution Pension (DC Pension) is simple in that it is a combination of how much you or your employer have contributed and how the underlying investments have grown.

This is very different to a Defined Benefit Pension  (Final Salary Pension) which has guaranteed and safeguarded benefits.

Everyone is entitled to the 25% tax free lump sum (PCLS) however it is important to note that you will be taxed on the remaining 75% at your marginal tax rate.

For a DC Pension Scheme, you can access your pension from the age of 55.

It is important to note that the costs of transferring a DC Pension are lower than from a DB Pension, although both options allow for greater flexibility and control.