A final salary pension or defined benefit scheme as it is often called can often be difficult to understand.
The scheme pays out an income which is based upon your earnings when you retire, and, unlike defined contributions determines a guaranteed amount; this of course means that the pension pot you put aside does not have to be touched unless necessary.
A final salary pension scheme combines your contributions, those from your employer and those from the Government and are invested in the stock market over the period of time that you are in employment.
A defined scheme ensures that the amount you receive is pre-agreed, hence the name.
Final salary pension schemes and career average schemes are two types of defined benefit pension, the former based on what you're paid upon retirement and the latter based on an average career salary.
Whilst it's important to determine which is best for you, both offer valuable benefits which include
index linking, a guarantee that your pension income will rise annually.
Additional benefits of the above include a full pension if retiring through ill health, death in service payments and reduced pension on early retirement.
As we first mentioned, the final salary pension scheme really is a conundrum, however if you're looking for advice on where you stand or would like to discuss embarking on a new scheme or other financial services, please contact the team at Bury Financial Advisers.
A wealth of knowledge and experience, they'll guide you through all you need to know to ensure a healthy financial future.
Call 0161 872 8013
