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| Home > Company Pension > Final Salary |
| Final Salary |
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The 'Final Salary' bit.
With a final salary scheme, the pension you receive at retirement is directly related to your final salary before retirement. This is a benefit because it means you will have a very good idea of what your pension income will be before you actually retire.
A final salary scheme can pay up to two thirds of your final salary when you retire, up to a maximum of £102,000. It can also provide a tax free lump sum at retirement, again up to a maximum of one and a half times your final salary. Taking the lump sum will normally reduce your pension.
Benefits included
Many final salary schemes have a host of additional benefits such as death in service benefits of up to four times annual salary. Widows & dependent children's pensions, known as death in retirement benefits & often long term disability benefits all in addition to the salary related pension already mentioned
Many companies increase the actual pension payments by approximately 3-5% per annum. This alone is a very valuable benefit that would be costly with a money purchase type scheme. |
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