Everyone knows that Final Salary (Defined Benefits) Company Pensions are better than their poor relations, the Defined Contribution, or Money Purchase Scheme.  After all, Final Salary Schemes provide members with a guaranteed benefit based upon their earnings and now this guarantee is Government, i.e., tax payer, backed.  What is less often discussed is quite why DB schemes are generally better; employers contribute a good deal more to them.  In fact, employers pay in almost three times as much to DB schemes as they do to DC schemes, so it is hardly surprising that the benefits are superior.

Scheme members are often wary of investment based DC schemes, rightly so, in many cases, but they should be concerned more about how much is contributed than where it is invested.  Final Salary schemes are invested, after all, its just that they are often cautiously invested and make up for it with high contributions.  Although, it helps to invest wisely, the lesson seems to be that successful pension planning has much to do with shovelling in a lot of money.