Defined Benefits Scheme

This is an employer-sponsored retirement plan where employee benefits are based on a formula using factors such as salary history and duration of employment. Investment risk and portfolio management are entirely under the control of the company. There are also restrictions on when and how you can withdraw these funds without penalties.

Advantages:

• Member knows exactly what pension he will receive
• You do not take the investment risks

Disadvantages:

• There are no guarantees that your pension will keep up with inflation as increases are at the discretion of the trustees and dependant on the investment returns within the fund
• The trustees can retain part of the investment return to build up a surplus in the fund - but this would not affect the benefit at retirement
• Final salary is extremely important and can have a major impact on the total benefit
• Employer has an open-ended liability with regards to his contributions 

With so many options available, it is best to get expert guidance before sealing your financial fate. Call AMBITON for straight talking, confidential advice and assistance.