A final salary pension in the UK is a workplace scheme that promises an income for life, worked out from your pay and your years as a member.

It is the best-known kind of defined benefit pension, and it works the other way round from a pension pot: the scheme tells you what it will pay, rather than you deciding how to turn savings into an income. Here is how the amount is worked out and how it is paid.

Free help exists. MoneyHelper's pension specialists answer questions on defined benefit schemes, and Pension Wise, which MoneyHelper describes as free, impartial and backed by government, gives appointments on defined contribution pots, although GOV.UK notes that it does not cover the State Pension, final salary or career average pensions. For a view on how your scheme pension fits with the rest of your retirement income, the form on this page passes your details to an FCA-authorised adviser, who can take it from there. Making the enquiry is free and quick.

What a final salary pension is

MoneyHelper's definition is the clearest short one:

A defined benefit pension is a type of workplace pension scheme. The money you get when you retire is based on your salary and the number of years you’ve been in the scheme. There are two basic types: final salary and career average.

— MoneyHelper, Defined benefit pension schemes: final salary and career average explained, read via the Internet Archive

So "defined benefit" (often shortened to DB) is the family name and "final salary" one member of it; career average, covered below, is the other. The terms are used interchangeably, and the FCA's consumer page says "A DB pension is sometimes called a final salary pension."

The law draws the line in a similar place. For tax purposes the Finance Act 2004 defines defined benefits as "benefits which are not money purchase benefits (but which are calculated by reference to earnings or service of the member or any other factor other than an amount available for their provision)" (section 152(7)). What you get depends on pay and service, not on a pot with your name on it.

That is the real difference from a defined contribution pension, the kind built up in a workplace pension pot, a personal pension or a SIPP. There, the value of the pot can go up or down depending on how the investments perform. In a final salary scheme there is no pot of your own to invest or draw from: the scheme pays each member the income its rules promise, and the employer stands behind that promise. Our guide to whether a final salary pension is better than a defined contribution one weighs the two side by side, and if you are not sure which you have, see how to check whether your pension is final salary.

Who has one? MoneyHelper says you might have a defined benefit pension if you have worked for a large employer or in the public sector. Whether employers still open them to new staff is a separate question, answered in do final salary pensions still exist.

How a final salary pension is worked out

Three ingredients, each defined in your scheme's rules: your final pensionable pay, your years of membership, and the accrual rate, the fraction of final pay earned for each year. MoneyHelper says final salary schemes "work out your retirement income using a fraction of the last salary you had at your employer", multiplied by your years of membership. Its example:

If your final pensionable salary was £30,000 and you had an accrual rate of 1/60th, you would typically earn an annual pension worth £500 for each year you were a member (£30,000 divided by 60). If you were a member of the scheme for ten years, your pension would pay out £5,000 a year at your scheme’s normal pension age.

— MoneyHelper, Defined benefit pension schemes explained (archived copy)

That is what "final salary 60th" means: one-sixtieth of final pay for each year in the scheme, or pay × years ÷ 60. An 80ths scheme divides by 80, so each year buys a smaller pension.

What counts as "final salary"

Not necessarily your last payslip. MoneyHelper notes that what counts as pensionable earnings "depends on the scheme"; some leave out overtime, commission, bonuses or benefits in kind. Some look back over more than one year: the Local Government Pension Scheme's member site says "Your final pay is usually your pensionable pay in the year you leave the Scheme. Pay from one of the previous two years can be used if it is higher."

Part-time work and older service

Part-time years can count in proportion to hours: in the LGPS final salary section, someone working 17.5 of 35 hours had membership "reduced by 17.5 / 35, which is half." Rates can also change over a career. LGPS membership before 1 April 2008 pays "a pension of 1/80th of your final pay plus an automatic lump sum of three times your pension", and membership between 1 April 2008 and 31 March 2014 pays 1/60th. One pension can be built from several sections, which is why statements look complicated.

Swapping pension for a tax-free lump sum changes the arithmetic again (see the final salary lump sum). If you leave early, the pension stops building up but "usually increases by a certain amount each year", MoneyHelper says, until you claim it: see deferred final salary pensions.

Final salary and career average: the two kinds of defined benefit

A career average scheme makes the same kind of promise but uses a slice of each year's pay instead of pay at the end, and MoneyHelper says "An extra amount is then added for inflation, so its value shouldn’t decrease over time."

The LGPS "changed from a final salary scheme to a career average scheme on 1 April 2014". Since then "1/49th of your pensionable pay is put into your pension account every year", adjusted each April for the cost of living. A member who joined earlier has both kinds of pension from the same scheme. The practical difference: final salary rewards pay rises late in a career, while career average weights every year's pay equally.

A hybrid scheme mixes defined benefit and defined contribution features (tax law treats hybrid arrangements as a category of their own), and an underpin usually means a minimum the benefit cannot fall below. Your scheme's own rules say whether either applies. Our guides to the USS pension and to the schemes of large employers such as BT and Royal Mail cover particular schemes.

Who pays in, and who carries the risk

MoneyHelper says you often need to contribute a percentage of your wages, but some schemes will be fully funded by your employer, and GOV.UK says contributions are higher for most defined benefit pension schemes than the auto-enrolment minimums. But your contribution does not fix your pension; the formula does. GOV.UK: "Your employer is responsible for making sure there’s enough money in a defined benefit pension to pay each member the promised amount. Your employer cannot touch the money in your pension if they’re in financial trouble." In a defined contribution scheme you carry the investment risk; here the employer does.

If the employer fails, GOV.UK says you are usually protected by the Pension Protection Fund if your employer goes bust and cannot pay your pension, with compensation it describes as usually 100% for people who have reached the scheme's pension age and 90% for those below it. See are final salary pensions protected? and the Pension Protection Fund.

Other rules while you build it up:

  • Tax. The annual allowance, £60,000 in the 2026/27 tax year according to HMRC's guidance on GOV.UK, counts "any increase in a defined benefit scheme in a tax year", not what you paid in. In a final salary scheme a big pay rise lifts the pension on every past year too. See pension tax relief.
  • Maternity leave. Contributions continue during paid leave, and if unpaid, GOV.UK says "your employer still has to make pension contributions in the first 26 weeks of your leave".
  • Short membership. After less than 2 years in a scheme, GOV.UK says you might be able to "get a refund on what you contributed", depending on its rules.
  • Paying more. Some schemes let you buy extra pension or pay additional voluntary contributions; see AVCs and final salary pensions.

How a final salary pension pays out in retirement

GOV.UK says you may be able to take some money as a tax-free lump sum if you are in a defined benefit pension scheme (check with your pension provider), and that you get the rest as a guaranteed amount each year. MoneyHelper adds that it comes "usually in monthly payments." HMRC calls this a scheme pension, which its manual describes as the only way a defined benefits or collective money purchase arrangement may provide a pension benefit: the scheme pays it, with no annuity to buy and no investments to choose.

  • When it starts. At the scheme's normal pension age. MoneyHelper says some schemes will let you take it earlier but you will typically get a lower income than the scheme promised (see early retirement reductions). Under HMRC's normal minimum pension age rules the earliest is usually 55, rising to 57 from 6 April 2028, except on ill-health grounds or with a protected pension age.
  • Lump sum. "In some schemes, taking a lump sum reduces the income you’ll get later on," MoneyHelper says. The tax-free part counts towards the lump sum allowance, £268,275 for most people according to HMRC's guidance on GOV.UK (read October 2026), more for some with protections; see how defined benefit pensions count towards the lump sum allowance.
  • Tax. It is taxable income, and most pension providers deduct Income Tax using Pay As You Earn (PAYE).
  • Increases. The FCA describes a guaranteed lifetime income that usually increases each year to protect against inflation; how much depends on the scheme: see do final salary pensions increase?
  • For life, and often for a partner. It is paid for life, and in MoneyHelper's words most defined benefit pensions keep paying a certain amount to a surviving spouse, civil partner or dependants; see final salary pensions on death.

You cannot take flexible withdrawals from inside the scheme (see the FAQ below). For the full set of choices at retirement, see your final salary pension options.

Where people differ most is in how the pension sits with their State Pension, other pots and tax. Weighing all of that in one conversation is what an FCA-authorised adviser does; the form on this page opens that conversation.

How to find out what your final salary pension is worth

With no pot, the question has two answers.

The income it will pay. The scheme is the place to get it. MoneyHelper: "You can usually check your statements or ask your employer for details on how they calculate your pension income." A member with defined benefit rights who asks for a statement must be sent one as soon as practicable, and no more than two months after the request is made, provided they have not had one in the previous 12 months (SI 2013/2734, regulation 16, which applies in England, Wales and Scotland). A general final salary pension calculator can do the pay × years ÷ accrual-rate sum, but not your scheme's definition of pay, early retirement factors or lump sum terms, so the scheme's own figures are the ones to rely on.

A cash value. There is none unless you consider leaving. If you ask for a transfer quotation, the scheme works out a cash equivalent transfer value: the lump sum it would pay to another pension in exchange for giving up your promised income. It is the price of giving up the promise, not a measure of what the pension is worth to you, and the regulators' view in the next section comes before treating it as either. See how a transfer value is worked out.

Lost an old scheme? MoneyHelper says the free Pension Tracing Service can help you find contact information. For typical amounts, see the average final salary pension.

Transferring out: what the regulators say

Some members are offered, or look into, a transfer to a defined contribution pension, which swaps the promise for a pot. The regulators' starting point:

The FCA and The Pensions Regulator (TPR) believe it’s in most people’s best interests to keep their DB pension. You can’t reverse a transfer, so you need to make sure you understand the risks so you can make an informed decision.

— FCA, Considering a defined benefit pension transfer, last updated 24/04/2025

The FCA says a transfer means you "Lose the guaranteed lifetime income from your DB scheme, for you and your dependants" and "Lose the inflationary protections offered by your DB scheme". Transferring out for fear the employer might fail also means losing "the protection available from the Pension Protection Fund (PPF) for eligible schemes".

Advice is also a legal step. Where safeguarded benefits such as a final salary pension are worth more than £30,000 (valued as for a transfer, but before any reduction for scheme underfunding), the scheme must check that you have taken appropriate independent advice before it lets you transfer (SI 2015/742, regulation 5, on legislation.gov.uk). If you are in an unfunded public sector scheme such as the Teachers’ Pension Scheme or the NHS Pension Scheme, MoneyHelper says, you "can only transfer your pension to another defined benefit scheme."

Be wary of anyone who raises it first: the FCA says not to talk to companies who contact you out of the blue offering to talk about your pension options, and its pension scams page lists the warning signs. GOV.UK warns that money taken before 55 outside the rules "could be an unauthorised payment", taxed at up to 55%.

The risks are covered in should I transfer my final salary pension? and can I cash in my final salary pension? To talk over your scheme pension with an FCA-authorised adviser, including the case for leaving it where it is, note that in the form on this page.

Final salary pension questions

Can I take my final salary pension and carry on working?

That depends on your scheme's rules, so ask the scheme administrator before you plan around it.

Can I use drawdown with a final salary pension?

Not from inside the scheme: HMRC's Pensions Tax Manual says "Defined benefits arrangements cannot pay drawdown pension." It would mean transferring out first, against the regulators' starting position. See final salary pensions and drawdown and pension drawdown.

Can final salary pension income be split on divorce?

It can be dealt with on divorce, but the options, and how they apply in Scotland as well as England and Wales, are a subject of their own, covered in what happens to your pension if you divorce.

Can I get free help with my final salary pension?

Yes, for guidance: MoneyHelper's pension specialists answer questions free, and your scheme explains its own rules. Pension Wise covers defined contribution pots, not final salary pensions. Regulated advice on your own situation is different: GOV.UK says of financial advisers that you will usually have to pay for their services.

What happens to my final salary pension if I leave my job?

You keep what you have built up. If you change jobs your workplace pension still belongs to you, and until you claim it the pension is revalued each year in the way described above. See final salary pensions on leaving or redundancy.

Does a final salary pension affect my State Pension?

They are separate entitlements that can interact; see final salary pensions and the State Pension and the guaranteed minimum pension.

Your next step

A final salary pension is a promise: a share of your pay for each year of service, paid by the scheme for life, usually rising and often continuing for a partner. Your scheme can tell you what it will pay and when. When you want it weighed against your State Pension, savings and retirement plans as a whole, the form on this page puts your enquiry in front of an FCA-authorised adviser.

Sources: MoneyHelper, Defined benefit pension schemes explained (archived copy); FCA, Considering a defined benefit pension transfer; GOV.UK, Workplace pensions; GOV.UK, Annual allowance; HMRC, Pensions Tax Manual, scheme pension and drawdown pension; Finance Act 2004, section 152; SI 2013/2734, regulation 16; SI 2015/742, regulation 5; LGPS, How your pension is worked out; FCA, Pension scams.