Education Corner

What is the difference between a Defined Contribution (DC) and Defined Benefits (DB) pension scheme?

Defined Contribution (DC)

DC pension schemes, sometime called ‘money purchase’ are the most common occupational pension arrangement across the maritime industry and indeed the UK in general. Retirement benefits are based on the money paid in by you and your employer which is then invested by the relevant pension provider. The value of your pension pot can go up or down depending on how the investments perform. Therefore, depending in the size of your pension pot will dictate the benefits you will receive.

The key to DC is the higher the amount of contributions going into a members pension pot the better chance of receiving decent retirement benefits at retirement.