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Defined benefit pensions

Call us for a free chat on 0800 032 9301

Lines open: 8.30am to 6pm Monday to Friday

What is a defined benefit or final salary pension?

A defined benefit pension is a type of pension that pays a specified income and/or cash lump sum when you retire. Sometimes called final salary or salary related pensions, defined benefit pensions are offered through an employer and the amount you receive will depend on:

  • How long you've worked for the employer offering the pension
  • Your salary in the last year (or number of years) as an active member
  • If you're accessing your pension before the selected retirement age

If you wish to access your pension before the selected retirement age there may be a reduction in your income and cash lump sum value.

If you stop working for an employer who has offered a final salary pension the benefits you build up to the date you leave are calculated and your pension income will be deferred until you wish to access it. Your pension will be revalued each year until you take the benefits.

How much will my lump sum be?

The lump sum value is dependent on your pension scheme and taking it may reduce the income you receive.

To get an estimation, contact your scheme administrator. These schemes are run by trustees who look after the interests of the scheme’s members.

What are my income options?

With defined benefit pensions, your income will be defined, and you won’t be able to take advantage of other retirement products like annuities or drawdown.

Your latest pension statement will tell you what your pension income may be based on your current salary and the retirement age, but this could go up or down if you leave the company, change your salary or take a lump sum.

Can I transfer my defined benefit pension to another pension scheme?

You can transfer your defined benefit pension to a defined contribution pension.

New regulations mean you must receive financial advice before scheme administrators will allow you to transfer any defined benefit pensions with a cash equivalent transfer value of £30,000 or more. They will also require confirmation from a financial adviser than advice has been given before transferring any funds.

Where can I get advice?

Our team of pension specialists can help you decide whether transferring your pension is in your best interest, and they can help you to reach your retirement goals.

Have a commitment free chat with a Pension Specialist

Call us on 0800 032 9301

TextDirect: First dial 18001

Lines open: 8.30am to 6pm Monday to Friday. We may record and/or monitor calls for training and audit purposes.

Start your conversation with a pension specialist today by telling us about:

  • Your current pension pots
  • Any contributions you're making
  • How much you've already saved