Defined benefit (DB)
These pay out a fixed, regular income when you retire, based on a percentage of your salary during your time at the company. The percentage is calculated based on the years you’ve worked at a company. Defined benefit schemes are becoming increasingly rare, as the company has full responsibility for ensuring there’s enough money in the pot to pay retired employees’ pension income. This can prove expensive. The most common type of DB pension is final salary, where your income is based on your salary when you left the company. But some organisations also offer career average DB pensions, based on your average salary.