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MyCompanyPension.co.uk - Helping members of occupational pension schemes to better understand their benefits.
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:: Scheme Member | Types of Pension Scheme | What is a cash balance scheme?
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What is a cash balance scheme?
A cash balance scheme is a form of money purchase scheme.
A cash balance type of money purchase scheme will provide you with money purchase benefits at retirement – usually in the form of pension and tax free cash lump sum. However, until you begin to draw your pension benefits you will not know the actual amount of pension or lump sum that will be available.
In a cash balance type of money purchase scheme, the investment risk before benefits are claimed is borne by the employer. Any shortfall on promised ‘pots’ are made up the employer.
Read on to see how a cash balance scheme differs from a usual money purchase scheme.
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This Factsheet is not yet available to members of Money Purchase schemes
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