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Benefit provision (Occupational provision (Trust Deed and Rules (benefit…
Benefit provision
Occupational provision
Trust Deed and Rules
benefit levels
member contributions
eligibility criteria
Trustees responsible for day-to day administration
Some administration carried out by employer
often final salary in nature
usually balance of cost
DC offers member flexibility
contributions
fixed
age related
service related
hybrid schemes
better of DB or DC?
State DB provision
PAYG or fund in advance
Means tested?
pros
a cost-effective way to guarantee that everyone achieves a certain standard of living
may be distributive
cons
people may be discouraged from providing for themselves
may create a poverty trap
may encourage people to squander existing wealth
may encourage fraudulent behaviour
may be perceived as unfair to those who do provide for themselves
means-tested benefits are not taken up by all who are entitled to them
may be complex to administer
conts/ benefits
flat rate?
earnings linked?
final salary
not targeted at the needy
selection risk
CARE
threshold?
ceiling
credit for dependants or carers?
Providers of benefits
The State
employers or groups of employers
individuals or groups of individuals
State provision
Legislation sets out provision
rights and obligations of parties
contributions to be paid
benefits payable
membership
all in employment
all residents
typically focuses on providing only a basic level of provision
private provision is needed above that level
State DC provision
contributions are paid into individuals' accounts and credited with interest
payment made on
retirement
ill health early retirement
death before retirement
earlier partial withdrawals in limited circumstances
Individual provision
personal pensions
alternative savings vehicles