Contract vs trust-based schemes
When you’re helping your clients choose between contract-based and trust-based schemes, you may find it depends on their heritage and what they’ve had before. For example, if employers have had their own trust-based scheme in the past, they may be more open to this again.
Contract-based schemes tend to be chosen by employers who don’t have the experience or resources to maintain a trustee board.
With TargetPlan, you can offer the same robust administration and support, whatever type they choose – contract or trust-based.
To help you decide whether a contract-based scheme or a trust-based scheme is right for your client, here’s a comparison of how they’re managed and the oversight that’s provided to members:
|Contract-based DC scheme||Trust-Based DC scheme|
|We manage all aspects of the scheme, as your pension provider||Run by an employer through an appointed board of trustees|
|Operated based on a contract between the member and us, the plan provider||The trustees have a fiduciary duty to act in the members’ best interests|
|Each member has their own ring-fenced policy||Assets are legally ring-fenced away from sponsoring employer’s assets|
|Regulated by The Pensions Regulator and the Financial Conduct Authority||
Regulated by The Pensions Regulator and the Financial Conduct Authority
Our contract-based pensions
- Group personal pensions
- Group stakeholder pensions
- Trustee Transfer Plan buy-out contracts
- Additional voluntary contribution (AVC)
Each of our defined-contribution (DC) schemes can be provided with full administration (including investment), or an investment-only service.