How does a defined contribution pension scheme determine its annual interest payable to members?

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How does a defined contribution pension scheme determine its annual interest payable to members?

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A defined contribution pension plan doesn’t have a pre-determined “interest” that it pays to beneficiaries. It invests the assets and when the time comes for the beneficiary to receive payments, those payments are based on the asset value at that time; benefits can change from time to time due to changes in the value of the underlying assets in the Plan.