Registered Pension Schemes
- pension funds
Pension Fund prices, performance charts and financial tools to help with your research.
Schemes to provide pensions are called Registered Pension Schemes.*
There are four main types of Pension Scheme, called Arrangements:-
Defined Benefit Arrangements
Benefits are determined by some kind of criteria, and are NOT dependent on the amount of any fund. The most common type is a “Final Salary” scheme where the benefits depend on your salary and length of service.
Money Purchase Arrangements
Benefits are entirely dependent upon the funds built up for the member. Most arrangements made by individuals are of this type, as are many company schemes.
Hybrid Arrangements
These occur when a scheme promises some kind of minimal value, irrespective of actual fund performance.
For example the terms might be “1/60th for every year of service, or whatever the fund buys, if greater”. If performance was good then the full fund will be used and it will be a Money Purchase Arrangement. If there was poor performance, then the scheme would pay out the 1/60th and be seen to be Defined Benefit.
Cash Balance Arrangements.
A type of Money Purchase Arrangement where, in the event that the funding fails to provide the required level of benefits, it will be made up to that level.
* In theory there can be other schemes which are not, but as these would not benefit from the favourable tax treatment of Registered Pension Schemes their use is expected to be limited, normally only for people whose unusual circumstances prevent them qualifying for a membership of a pension scheme, or who are over their Lifetime Allowance and need alternative arrangements. Such schemes however fall outside the tax environment for pensions.
Last updated on April 11, 2008