Final Salary Pension (Defined Benefit)
This type of occupational pension scheme, also known as a defined benefit scheme, provides benefits usually based on your salary and the number of years you've been in the scheme.
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You'll need to contact your scheme administrator for details on your pension but here are some common features of defined benefit schemes.
- Tax-efficient* - payments to your defined benefit pension plan qualify for tax relief, and you can take a tax-free cash lump sum on retirement. Read more about tax benefits. Note that pensions in payment are taxed as earned income.
- Defined income - your pension benefits are set (defined) based on the length of time you've been in the scheme and your salary.
- Flexibility - at the normal retirement age you'll usually have a number of options. These, for example, include deferring your income, taking pension income only, and commuting part of the income to a tax free lump sum and taking a reduced income.
- Contributions - your employer will contribute (normally with your own payments) enough for the scheme to pay the defined benefit stated.
Review your final salary pension
- Contact your scheme administrator to find out about your pension - details will be on any correspondence, such as your annual statement
- You can also send us a secure message online anytime
- For more general information, see our pension guide
*The above is based on our understanding, as of April 2011, of current taxation, legislation and HM Revenue & Customs practice, all of which are liable to change without notice. The impact of taxation (and any tax relief) depends on individual circumstances.
