Definitions for "Money Purchase"
With this type of scheme, you are not promised a particular amount of pension. Instead, the scheme invests your own and your employer's contributions until you retire. These are then turned into retirement benefits - a pension and, if you choose and are allowed, a tax-free lump sum. The fund available depends on the choice of investments and how they perform.
Money purchase is one of the terms used to describe a pension where you pay contributions into a fund which is invested over the years until you retire. You can then use the fund to buy an income each year when you retire.
The determination of an individual memberâ€(tm)s benefits by reference to contributions paid into a pension scheme in respect of that member, usually increased by an amount based on the investment return on those contributions.