Hybrid Schemes Explained

What is a hybrid pension scheme?

A ‘hybrid’ pension scheme is one which carries both defined income benefits as well as a pension ‘pot’. It is a mixture of a private plan with a defined benefit scheme.

Most hybrid schemes include a pension fund, or ‘pot’, which is invested. Alternatively pension funds might be kept in a high-performing cash fund. The investment may offer long-term returns, but will also be typically underpinned with a minimum income guarantee.

In some cases, it may be that the pension fund has a minimum growth rate attached. This might be a guarantee to keep pace with inflation (whether CPI or RPI) to its normal scheme retirement age. While returns may not outperform inflation, and can appear static, they are guaranteed and can offer a good hedge against other investments or pension funds exposed to the markets.

If you hold a hybrid scheme valued in excess of £30,000, you must take advice from a pension transfer specialist before you can make any changes.

Review your hybrid pension scheme

To better understand your plan and its benefits, use our FREE research toolkit. Let us know you think you hold a hybrid scheme. The technicals of these schemes can be complex. It’s important to ask the right questions in order to gain the full information about your pension.

If your benefits are valued in excess of £30,000, in order to transfer to a private pension, you would need the advice of a Pension Transfer Specialist.


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