• Provide benefits that are guaranteed to be a proportion of final salary. The major advantage of this type of scheme is that the benefits are guaranteed.

• The scheme sets a normal retirement age, this is the age up until the employer will pay into the scheme and the age members usually retire.

• The pension does still provide the tax free lump sum but the calculation is more complex to work out the value being offered.
• Benefits provided are calculated using 3 main factors –

 – pensionable service (period of membership),

– pensionable remuneration (definition of salary used to calculate benefits) &

– accrual rate (e.g. 1/60th of pensionable remuneration for each year of service).