How the DB Plan Works

In a DB plan, members are promised a particular level of benefit at retirement, based on their length of service and  their salary when they retire.

On 31st December 2011 the DB plan closed to new members and also to future accrual of benefits for existing members. Benefits aready accrued under the DB plan are preserved until retirement.

The DB plan was replaced from 1st January 2012 with a Defined Contribution (DC) plan.

The pension Trustee is responsible for ensuring that the pension fund is sufficient to provide the promised retirement benefits to members. If the fund is in deficit, then the Trustee will require the participating employers to make additional contributions to eliminate the deficit.

Consequently, in a DB plan, the employer carries the risk that the promised pension costs more to provide than was originally anticipated.

In recent years, a combination of increased regulation, sustained poor investment returns on assets and rising human longevity has significantly increased the cost of providing a DB pension.

As a result the Baptist Pension Scheme and the majority of other DB schemes are in deficit. Employers are having to make deficit contributions and because of the increased costs, outside the public sector, most DB schemes, have, like the Baptist Pension Scheme, closed to future accrual.

If you have at any time between 2 September 2005 and 31 December 2011, employed a member of the DB plan, then it is essential that you understand the contents of the Defined Benefit section of this website.