Defined Benefits

How do Defined Benefit also known as Final Salary Pensions work?

If you are fortunate enough to have one, defined benefit pensions are the most attractive pension arrangement as they offer a guaranteed level of income which will increase each year. Due to the high cost of providing Defined Benefit pensions most employers no longer offer this type of pension. Due to the introduction of pensions freedoms, they are unlikely to offer the same flexibility as other pension schemes. For example, you are unable to vary the income you receive or, in some cases, withdraw larger lump sums should you wish to do so. One further drawback is that a defined benefit pension cannot be inherited by your chosen beneficiaries. Should you die prematurely most of the benefits will be lost and nothing will be passed to your children.

As a result of increasing pension freedoms, there are now some options available for those with defined benefit pensions. As this is a very complex area, it is imperative that financial advice is sought.

The value of a pension with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.