Pension basics · Defined benefit

Defined benefit pension explained — final salary and CARE guide.

A defined benefit pension is a promised income rather than an invested pot. This guide explains final salary, career average, accrual, inflation increases, dependants and transfer risks.

By Pension Bible editorial team·Last reviewed 15 May 2026·8 min read

Direct answer: what is a defined benefit pension?

A defined benefit pension is a pension where the scheme promises a retirement income based on a formula.

It is different from a defined contribution pension. In a defined contribution pension, you have a pot. In a defined benefit pension, you usually have a promise.

That promise is normally based on factors such as:

• years of pensionable service;
• pensionable salary or career earnings;
• accrual rate;
• normal pension age;
• scheme rules on inflation increases and dependants.

Defined benefit is often shortened to DB. Final salary and career average pensions are both types of DB pension.

Common examples of DB pensions

Defined benefit pensions are now much less common in the private sector, but they remain important in the public sector and in older employer schemes.

If you work in the NHS, teaching, local government, the civil service, police, fire service or armed forces, your main workplace pension may be DB. The public sector pensions guide compares the major schemes.

Final salary vs career average

The two main DB structures are final salary and career average.

In a final salary scheme, the formula is commonly:

years of service × accrual rate × final pensionable salary

Example: 20 years of service × 1/60 × £45,000 = £15,000 a year before any lump-sum choices or scheme-specific adjustments.

In a career average scheme, each year builds a slice. A worker earning £35,000 in a 1/57 career average scheme builds £614 a year of pension for that year. That slice is then revalued under the scheme rules until retirement.

The exact formula matters. A small difference in accrual rate, pensionable pay definition or revaluation can materially change the eventual pension.

What does a DB pension usually provide?

DB pensions are valuable because they often package several features together:

• income for life;
• inflation-linked increases before and/or after retirement;
• a pension for a surviving spouse, civil partner or dependant;
• ill-health retirement rules;
• early retirement options, usually with reductions;
• scheme-backed administration and investment risk management.

The exact benefits depend on the scheme booklet. Do not assume two DB schemes work the same way.

Unlike a DC pension, a DB pension is not normally an individual pot where withdrawals reduce the balance. The scheme is responsible for paying the promised benefits under its rules.

Accrual rate, pensionable pay and service

Three terms do most of the work in DB calculations.

An accrual rate of 1/60 means each year builds 1/60 of pensionable pay as annual pension. An accrual rate of 1/80 means each year builds 1/80, often with a separate automatic lump sum in older schemes.

For career average schemes, each year's pension slice may be revalued before retirement. Some schemes revalue in line with inflation; others use scheme-specific rules.

Normal pension age and early retirement

Every DB scheme has a normal pension age: the age at which benefits can usually be taken unreduced.

Legacy final salary schemes may have normal pension ages such as 60 or 65. Many newer public-sector career average schemes link normal pension age to State Pension age.

Taking a DB pension early is often possible, but the annual income is usually reduced because it is expected to be paid for longer. This is called an actuarial reduction.

The early retirement with a defined benefit pension guide explains how those reductions work. Scheme-specific pages such as NHS pension early retirement and teachers' pension early retirement cover the details for those schemes.

Lump sums and commutation

Some DB schemes include an automatic tax-free lump sum. Others let members exchange part of the annual pension for a lump sum at retirement. This exchange is called commutation.

The trade-off is scheme-specific. Taking more lump sum usually means permanently giving up some annual pension.

This is not automatically good or bad. It depends on the commutation rate, tax position, health, dependants, other assets and income needs.

For wider tax rules, see pension lump sum tax-free.

DB pension vs DC pension

The simplest distinction is promise vs pot.

DB pensions can be less flexible, but the certainty can be hard to replace. DC pensions can be more flexible, but they carry investment, withdrawal and longevity risk.

What if the employer or scheme has problems?

Private-sector DB schemes are funded through scheme assets and employer support. Trustees and the employer have responsibilities for funding and governance.

If an eligible DB scheme's employer becomes insolvent and the scheme does not have enough assets to provide at least Pension Protection Fund compensation levels, the Pension Protection Fund may step in.

Public-sector schemes have different backing and rules, so the PPF point does not apply in the same way to every public-sector pension.

The practical point is simple: DB pensions have protections, but the protection route depends on the scheme type. Read the scheme booklet and administrator notices rather than assuming one rule covers every DB pension.

Transferring a DB pension

Transferring a DB pension usually means giving up a promised income in exchange for a cash equivalent transfer value paid into a defined contribution arrangement.

That can be a permanent decision. The benefits given up may include:

• income for life;
• inflation increases;
• spouse, civil partner or dependant pensions;
• ill-health rules;
• scheme-specific early retirement terms;
• protection from managing withdrawals yourself.

The FCA and The Pensions Regulator say keeping a DB pension is in most people's best interests. For safeguarded benefits worth more than £30,000, regulated financial advice is normally required before transferring to a flexible pension arrangement.

This page does not recommend transferring or retaining a DB pension. It explains the mechanics. If you are considering a transfer, read final salary pension transfer and speak to an FCA-regulated adviser with the correct pension transfer permissions.

What to check on a DB pension statement

When you receive a DB pension statement, check:

For public-sector scheme examples, use the NHS pension calculator, LGPS calculator, civil service pension calculator and teachers' pension calculator.

This is factual information, not financial advice. If you need a personal recommendation about a defined benefit pension, speak to an FCA-regulated financial adviser.