DC Contract schemes
For financial advisers only
TargetPlan for DC Contract schemes
Defined contribution (DC) pension schemes remain the dominant form of pension provision in the UK so you need a robust offer for your clients’ needs.
TargetPlan offers group personal pensions (GPPs), and stakeholder schemes.
Contract-based vs trust-based DC schemes
Helping your clients choose between contract-based and trust-based schemes is often defined by the heritage of the employer – for example, if they’ve had their own trust-based scheme in the past. Contract-based schemes tend to be favoured by employers without the experience or resources to maintain a trustee board.
With TargetPlan the same strong administration and support is available which ever form of scheme, helping you focus your clients on the decision between contract and trust.
Our graphic below shows the way that different schemes are managed and the level of oversight that is provided to members:
| Trust-based DC scheme |
|---|
| Run by an employer through an appointed board of trustees |
| The trustees have a fiduciary duty to act in the members’ best interests |
| Assets are legally ring-fenced away from sponsoring employer’s assets |
| Regulated by The Pensions Regulator and the Financial Conduct Authority |
| Contract-based DC scheme |
|---|
| A third-party plan provider who will manage all aspects of the scheme |
| Operated on the basis of a contract between the member and the plan provider |
| Each member has their own ring-fenced policy |
| Regulated by The Pensions Regulator and the Financial Conduct Authority |
The benefits of contract-based pension schemes are they remain individual contracts between the member and the pension provider, with no fiduciary duty imposed on the sponsoring employer. Contract-based schemes don’t have to have a trustee board to look after member interests although some employers may set up governance boards to monitor contract-based schemes.
There’s also an FCA requirement for the plan provider to put an IGC in place to act as a customer advocate, reviewing whether workplace pensions provide value for money.
- Occupational DC & AVC schemes – investment-only service
- Occupational DC & AVC schemes – investment and administration
- Aegon Master Trust
- Group personal pensions
- Group stakeholder pensions
- Trustee Transfer Plan buy-out contracts
- Flexi-access drawdown
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