Overview

More pension schemes will now count as defined contribution (DC) and escape the defined benefit (DB) funding requirements.

The Court of Appeal has decided that a scheme can be DC under pensions legislation even if there can be a mismatch between its assets and its liabilities, or if the final benefit depends on an actuarial calculation.

The only previous case to explore the distinction between DB and DC schemes in detail had taken a purist line: to be DC, benefits had to be the direct product of the contributions paid in and the real return they earned. Many DC schemes operate like that. But others include features that beg the question whether they count as DC under the legislation.

Click to read more of Burges Salmon’s analysis of the changes.