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Defined contribution pension scheme assets fall sharply

A report by Aon has today confirmed that the defined contribution pension sector has suffered a £140 billion loss in value since the onslaught of the worldwide credit crunch. Defined contribution schemes are becoming ever more popular because they do not fix the resulting pension payments into the future and basically, what your pot is worth at the end will be used to acquire an annuity or fund a drawdown situation for members.

Defined contribution schemes have very much taken over from defined benefit schemes whereby employees can expect to receive a fixed pension payment upon retirement, no matter what the size of their pension pot. This is a situation which has literally brought many pension schemes and a number of companies to their knees. Many defined benefit schemes are being closed down with members offered substantially improved terms to transfer to alternative arrangements.

Those who do receive the option to transfer away from a defined benefit scheme should take professional pension advice as soon as possible because the short-term potential gain can actually lead to a long-term substantial loss. These companies operating defined benefit schemes are not offering you vastly improved terms to transfer away for no reason!

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