Benefits overview and providers of benefits (Pension)

Question 1

Key feautures of pension contracts

Answer 1

Primarily used as a means of providing income in retirement for individuals and possibly their dependents
May provide other benefits
Are long term arrangements
May have options to change the form or timing of the benefit

Question 2

DB scheme

Answer 2

Rules define the benefits independently of the contributions payable, benefits are not related to any investment.

Question 3

Hybrid scheme

Answer 3

Risks are shared between different parties involved

Question 3

DC scheme

Answer 3

Provide benefits where the amount of an individual member’s benefits depends on the contributions paid into the scheme i.r.o. that member, increased by the investment return earned on those contributions.