• David Calver

One of the questions we often get asked here at Pension Partner is ‘what exactly is a final salary scheme?’ This article aims to give readers a brief understanding of what these types of pensions are, and how to know if you may have one.

To begin with, it is important to note that there are a number of different pension types. Most pensions will fall under the category of defined benefit, defined contribution or state/government pensions with many variations of each. Should you be unsure as to what type of pension you may have, browse our website to learn more or get in contact with our friendly team.

What is a final salary / defined benefit pension?

A defined benefit pension is a type of occupational pension scheme and it is rare to find employers that still offer membership to new employees. In short, these pensions will usually be salary related and provide you with a retirement income which has been based on your salary and length of service.

Final salary schemes will provide you with a pension until your death, after which your spouse will receive (in most cases) a reduced pension for the remainder of their life. Children can in some circumstances receive benefits from these pensions upon a member dying, but this is uncommon.

Your benefits accrued within a final salary scheme are also 'index-linked' - meaning they will continue to rise in line with inflation. This can be based on retail price index, consumer price index and in some cases a fixed revaluation rate offered by your scheme, or perhaps a mixture of all three for various periods of service which can be confusing. As pensions are an asset that cannot be drawn from until we reach 55 years old, it is very important that they experience some kind of growth in order to avoid a loss of purchasing power due to inflation over a long period of time. It is therefore particularly important to understand the growth that you can expect from such schemes and ultimately what you expect to receive from them in retirement.

How is my defined benefit pension calculated?

Here's a quick example - remember, these figures are for demonstration purposes only - every company will use different numbers and accrual rates, in addition to numerous other factors:

  • John leaves Company X, where he was earning £40,000 per annum in his final year of service.

  • He worked at Company X for 15 years

  • Company X uses an accrual rate of 1/60th of a member’s final salary for each year of service.

  • John's annual pension would be £10,000 (15 (years) x 1/60th (accrual) x £40,000 (final salary).

Once again this is a rough guide, and you are advised to ask your financial adviser or scheme administrator for this information.

Many scheme members also take advantage of their opportunity to receive an annual CETV completely free of charge - be sure to read our article: What is a CETV to find out more.

A CETV (cash equivalent transfer value) will provide members with a cash equivalent sum that they can transfer into a pension of their choosing and give up the annual pension accrued within their defined benefit pensions.

Please note that any CETV offered by a defined benefit pension should be carefully considered and advised upon by a fully qualified and authorised financial adviser.

It is now a requirement of the FCA for all final salary members whose CETV’s are valued at above £30,000.00 to obtain financial advice prior to transferring.

Another form of defined benefit pension are CARE schemes, which is short for

'Career Average Revalued Earnings' - this is typically based on your average earnings throughout your career and are similar to final salary pension schemes in numerous aspects.

What would happen to my final salary pension if the company were to collapse?

This is a very relevant question that many members have. In short, the employer and scheme would be assessed by the UK's "pension lifeboat" scheme, the Pension Protection Fund - known as the PPF.

The PPF would assess whether they could take the scheme on board with a view to providing a reduced pension pay out for members. Members of defined benefit pensions have been known to transfer out of their schemes upon receiving news that they will be assessed by the PPF, it is strongly advised that members in such circumstances obtain appropriate and thorough advice before making such decisions.


If you are unsure which type of pension you have, or believe you may have a final salary pension that you have lost track of, Get in touch with our friendly Pension Investigators and we’ll find out all the information you need to ensure you’re in the know.

  • David Calver

There is approximately £20 billion in lost pensions, according to figures issued by the

Association of British Insurers (ABI)

(link - https://www.abi.org.uk/news/news-articles/2020/05/19.4-billion-of-pension-pots-unclaimed-just-because-of-house-moves/)

with an incredible estimate of 1.6 million pension pots forgotten or left behind by those who paid into them. The introduction of auto-enrolment coupled with tendencies to move jobs more frequently will likely compound the problem.

There are many factors that contribute to the issue, among them are people moving jobs,

changing address, and simply not knowing who administrates their policy which results in

savers wondering “how do I trace my pension”.

So how exactly can you go about finding a lost pension?

We here at Pension Partner specialise in finding our clients' frozen, lost or deferred pensions.

Having helped thousands of savers get reacquainted with their various policies we are one of

the country's leading track and trace services.

All you need to do is fill in a Letter of Authority (Letter of permission) with some basic

details which will allow our Pension Detectives to speak with your schemes. Following this you'll receive a full breakdown and be up-to-speed on where your pensions are, allowing you

to review and plan for retirement whilst saving the laborious task of spending hours on the

phone to potential administrators.

How do we know where to look?

This is a question our clients often ask us if they have tried to trace the pensions without

assistance. We here at Pension Partner have built our own cutting-edge database that tells us which administrator looks after which company's pension scheme. We've built this

throughout years of tracing and it's always our first port of call when we begin tracking our

clients' lost pensions.

In the rare case our database does not hold the details, we will liaise with your previous

company's HR department to find out who administered your pension and if you were


Even if you're unsure about a potential pension with previous employers, we can be certain. Be sure to contact us (https://www.pensionpartner.co.uk/help) and one of our friendly Pension Investigators will get in touch!

  • David Calver

Updated: Nov 3, 2020

The Pensions Dashboard, touted by the government to provide users with an overview of all their pensions in one place, has been delayed by 3 years...


The project’s delivery group, The Pensions Dashboards Programme, released a statement on the 28th October revealing that lack of data was the primary cause behind the delay. It further went on to say that their next deadline would be late 2023.

The government’s original announcement regarding the Dashboard came 4 years ago, in 2016. This was made with a view to having the Dashboard designed, built and implemented by 2019, with the ultimate goal of improving retirement planning.

However, with so many pension schemes, outdated systems, and types of pensions, collating such data is proving to be harder than initially thought, and the complexity has proven an extremely tough challenge.

We here at Pension Partner specialize in tracking down our clients’ lost and frozen pensions, with most cases taking between just 2-4 weeks - so instead of waiting for 2023 to get on top of your finances, why not get in touch with us today and let us do all the work? We’ll help you understand exactly what you have and if you’re on the right track for retirement.

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Pension Partner does not provide advice other than recommending our free non-obligatory service. We partner with fully regulated and authorised financial services consultancies throughout the UK & overseas who can provide our clients with the appropriate financial planning should they require it.​ 

Pension Partner is incorporated and registered in England & Wales under company registration number 11935286