Explain the differences between a defined benefit pension scheme and a defined contribution pension scheme and evaluate their respective advantages and disadvantages for employers and employees.

Question 1

Evaluate the budget and make financial recommendations to the couple based on this evaluation.

Question 2

1. Explain the differences between a defined benefit pension scheme and a defined contribution pension scheme and evaluate their respective advantages and disadvantages for employers and employees.
2. A person earning £50,000 a year and retiring after 40 years in a 1/80^th defined benefit pension scheme would receive a pension of how much? (Show your workings)
3. If a pension fund is valued at £40,000 and the annuity rate is £600, what would the expected income per annum be? (Show your workings)

Question 3

1. Explain the contributory factors resulting in the rise in the percentage of UK adults in their 20s choosing to rent rather than purchase their home.
2. Using the household equivalence scale work out by what percentage a couple would need to increase their income to maintain their pre-children standard of living if they have:

• 3 children aged 6, 15 and 17 years old
• 2 children aged 1 and 2 years old
• one baby aged 1 year