Important Points for IC 83 - Group Insurance and Retirement Benefit Schemes Exam
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A hybrid scheme offers both defined benefits and defined contribution sections or benefits that are the greater of two amounts.
One of the defining characteristics of occupational pensions is that they are 'tested' on their emerging benefits rather than on contribution levels. The Inland Revenue imposes limits on the size of the pension, the tax-free lump sum and death benefits, known as maximum emerging benefits.
The calculation of final salary can be based on emoluments earned in years prior to retirement and inflated by the retail price index to the year of retirement. This is known as dynamising.
An employers contribution of at least 10 per cent of total contributions is a mandatory requirement of an exempt approved occupational pension scheme, except where the scheme is over-funded.
A members personal contribution is not a mandatory requirement of an exempt approved occupational pension scheme. In practice, however, a personal contribution to the main scheme is usually a condition of membership.
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