What is a defined benefit pension?
- A defined benefit pension is a system where the certain amount of salary that you are paid according to the number of years you have worked for your company and the pay that you have earned.
How does a defined benefit pension work?
- Defined benefit pension increases every single year and pays out a fixed and secure amount of salary for life.
- You are most likely to have one if you have worked within a large company/ employer or in a public sector.
- It is your employer's responsibility to provide towards the scheme and to make sure that there is plenty of money in your account for the time you retire to pay your pension.
- An employee may contribute towards the scheme too.
- If you die the pension scheme usually will continue to pay to your spouse, dependents, or civil partner.
