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Final salary scheme (defined benefit scheme) |
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Final salary scheme (defined benefit scheme)A pension scheme in which an employee's pension is based on number of years of service and final salary with each employer. In this type of scheme employees are typically provided with 1/60 of final salary for each year of service up to a maximum of 40/60 that is, two thirds of final salary. At retirement a tax free lump sum may be taken at the expense of a reduced pension.Similar MatchesDefined benefit planDefined benefit planA pension plan obliging the sponsor to make specified dollar payments to qualifying employees. The pension obligations are effectively the debt obligation of the plan sponsor. Related: Defined contribution plan Defined benefit pension planDefined benefit pension planA pension plan in which an employee's pension benefit is related to number of years service and final salary with each employer. Defined contribution planDefined contribution planA pension plan whose sponsor is responsible only for making specified contributions into the plan on behalf of qualifying participants. Related: Defined benefit plan Money purchase scheme (defined contributions scheme)Money purchase scheme (defined contributions scheme)A pension scheme in which the benefits will be dependent on contributions to, and growth of, the fund and the fund manager's costs. Simplified defined contribution schemeSimplified defined contribution schemeSee: 'defined contribution pension plan' Further SuggestionsDefined asset funddefined contribution pension plan |
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