Defined Contribution (DC) pensions are schemes where the value of your pension pot (and therefore, what you can draw when you retire) depends on your contributions and how the investments, which your contributions went towards, performed.
There is generally great flexibility in terms of how you can draw benefits from your pension at retirement – typically you can take a tax-free lump sum (see also Pension Commencement Lump Sum (PCLS)), an annuity, income drawdown, or a combination of these (see also our retirement planning blog post).
DC schemes are also known as ‘money purchase’ schemes.
See also our comparing defined benefit and defined contribution pension schemes blog post.
