Final Salary schemes

Final Salary Schemes provide a pension based on the length of time you have been a member of the scheme and your salary at the date you retire from or leave the scheme (hence the term ‘final salary’).

The rate at which your pension builds up is called the accrual rate and is usually expressed as a fraction (e.g. 1/80th).

A common accrual rate is 1/60th, so that after 40 years service your pension entitlement would be 40/60ths, or two thirds of your final salary.

After 30 years in a 1/60th scheme a pension of half your final salary would be paid.

Lower accrual rates mean that it takes longer to build up the same value of pension.  For example, in a 1/80th scheme it would take you 40 years to build up a pension of half your final salary.