This style of super scheme means that your final super benefit is determined in advance, by applying a fixed or 'defined' formula usually based on your length of service, contributions and final salary. Members of this type of scheme are not able to choose an Investment Plan - as the benefit is defined and doesn't depend on investment returns. An example of a defined benefit scheme is Gold State Super.
A scheme in which the pension and other benefits which will be paid to the members and/or their dependants are clearly stated in the rules of the scheme. Most defined benefit schemes are final salary schemes.
another name for a final salary or earnings-related pension scheme where the benefits are set as a proportion of pay at or near retirement, while the level of contributions into the scheme will rise or fall depending on the balance between the fund's assets and liabilities. Strictly speaking this is a broader category than final salary schemes as there are a small number of schemes which base the pension calculation on earnings averaged over the member's career rather than at retirement.
a pension scheme set up by an employer to give an employee a pension based on their final salary at retirement. The benefits available under such schemes may vary depending on when they were originally created and when you joined the scheme and how generous the employer wishes to be. It is common for the pension to be expressed in terms of a number of 40ths your final salary (maximums are usually set at 40/60ths or 40/80ths) with 1/40th being earned for each year of pensionable service by the employee. Such schemes usually incorporate an entitlement to take part of your pension as a lump sum and this is commonly limited to 1.5 times your final salary (although employees who joined schemes before 1987 may be entitled to take all their benefits in the form of a tax-free lump sum).
This is where the rules of the scheme decide how much pension the member will get. There are different ways of working out the size of the pension, but the member will know which system the scheme uses. The most common type of defined benefit scheme is a final salary scheme.
A scheme where the scheme rules define the benefits independently of the contributions payable, and benefits are not directly related to the investments of the scheme. The scheme may be funded or unfunded.
A defined benefit pension scheme is one where the pension paid is calculated using a formula laid down in the scheme rules. Normally the formula will take into account the period the member has been in the scheme, and the salary the member has received over some or all of that period. For example, at retirement a defined benefit scheme might provide a pension of one eightieth of salary received in the years preceding retirement, for each year of service in the scheme