In a defined contribution scheme, the pension you receive on retirement depends on several things, including:
- the amount contributed by you and your employer;
- the investment returns achieved on your individual account (after any charges have been deducted);
- the cost of buying a pension when you retire, if you choose to buy one;
- the benefit options that you choose at retirement (for example, how your pension increases in retirement, or whether you want a pension to be paid to your spouse after your death); and
- the cost of providing these benefits.
You’ll be automatically enrolled into the Scheme on the day you join TSB. You can, however, opt-out of the Scheme by completing an Opt out form, but you may be automatically re-enrolled at a later date. If you’d like more information about auto enrolment, Opting out tells you more.
The Scheme gives you choices on how much you save and where your contributions are invested. Contributions are paid on your behalf and are invested into your account.
Once you’ve chosen the level of contributions you want to make, you can then choose to invest them in a number of different ways. There are six core funds designed to meet most members’ needs: three growth funds and three approaching retirement funds. See Your investment choices for more information.
When you decide to have your benefits paid, you currently have the option of taking up to 25% of the value of your account as tax-free cash. The rest of your account will be used to provide the retirement benefit options you choose. For more details visit Planning your retirement.
Each year you'll receive an annual statement. This shows the current value of your account and an estimate of how much pension you could purchase with your account in 'real terms'. To illustrate this, a number of industry-standard assumptions are used which you can find listed on your statement.