money-purchase

money-purchase

n
(Banking & Finance) (modifier) relating to a pension scheme in which both employer and employee make contributions to a fund that is used to buy an annuity on retirement. The amount paid as a pension depends on the size of the fund
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e rule changes mean that from April 2015, anyone aged 55 or more can take their entire pension pot as cash - assuming they have a money-purchase pension rather than one based on their salary.
This summer, PriceWaterhouseCoopers announced that just 25% of employers were offering such schemes, preferring instead money-purchase plans, a cash balance plan, or career average revalued earnings, also known as Care.
Because salaries increase over time, the long service/short service disparity in the annual pension from a money-purchase plan-as a percentage of final average compensation--is much less than if salaries do not increase.
Mr Harper pointed out the role of trustees has become more relevant than ever in money-purchase, "defined contribution" schemes, which have replaced many final salary arrangements, because the successful investment of contributions by both employees and the company is critical to the size of the eventual pensions.
Workers at plants in Stoke-on-Trent, Dundee and Ballymena in Co Antrim will be transferred to a cheaper money-purchase scheme.
The Transport and General Workers Union urged Michelin to "think again" over shifting members on to a money-purchase scheme.
Three-quarters of such occupational schemes are already closed to new employees, who are now only offered less favourable money-purchase schemes.
Unlike many businesses that had resorted to money-purchase schemes, Tesco had formulated a defined-benefit pension based on individuals' average salary over their careers.
Hewitt says a 35-year-old paying 5% of a pounds 28,000 salary into a money-purchase (defined contribution) scheme and retiring at 65 would receive only pounds 5,000 a year in today's money.
401 (k) or money-purchase plan) that provides a participant the opportunity to choose from a bread range of investment alternatives that includes at least three diversified investment categories with materially different risk and return characteristics.
Dropping money-purchase or combined plans in favor of a profit-sharing plan alone may reduce cost and duplication and allow companies the flexibility of contributing maximum amounts in good years and smaller amounts in other years.