Tempus works with a number of partners to offer defined contribution (DC) pension plans to its corporate clients. In these kinds of pensions, contributions from the employer and its employees are invested to buy a pension or other benefits for each employee at retirement.
Defined contribution pension schemes offer a good level of transparency and flexibility. Some of the key benefits are summarised below:
- Each employee has their own individual fund value so it is easy to ascertain at any point what that fund value is, as opposed to a defined benefit (DB) pension scheme where contributions by all of the company’s employees are pooled
- Each employee has the ability to influence how the contributions are invested in terms of the level of risk, for example, choosing higher risk investments in the earlier years of the scheme and safer assets in the latter half of the life of the scheme. They don’t all have to opt for one common investment mix
- At retirement, there is flexibility as to the type of annuity to purchase with the defined contribution scheme and which annuity provider is selected. There may also be the option of taking the retirement benefits at any age after 50, if the employee has left the employment of the company who originally set up the scheme
With a defined contribution scheme, please note that contributions invested in the scheme, along with any investment returns will be paid, however the retirement income is not guaranteed.
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