Defined Contribution (DC) workplace pension scheme

In a workplace/occupational DC pension scheme, you build up a pension pot which is intended to pay you a retirement income based on how much you and/or your employer contribute and how much this grows. Simply the more money that goes into your DC pension pot the greater chance you have of securing a reasonable income at retirement.

While there is no promise that at the end of your working life you will have built up a sufficient amount of money, it is important that during the run up to your retirement your money is invested wisely and that the investments are fit for purpose.

Your money will usually be invested in one fund or a number of funds. A fund is a way to invest money. Depending on what type of fund it is, your money could be invested in property, shares (equities) in companies, bonds, or a mixture of different types of investments.

When you join a workplace pension your money will usually be automatically invested in a fund for you. This is sometimes called the ‘default’ fund and will have been chosen by the pension scheme who have investment advisors who set the default fund to meet the investment needs of most of the members.

The majority of members tend to stick with the default fund for many