Company Pensions: Final Salary schemes
The 'Final Salary' scheme
With a final salary scheme, the pension you receive at retirement is related to your final salary before retirement and the number of years service you have with that particular employer. A final salary in the years just before retirement is often the highest salary an employee has achieved with a particular employer, coupled with several or many years of service this method of calculating retirement benefits can secure a very good pension for the rest of an ex-employees life. Upon retirement pension benefits can be secured with the provision for a spouse of dependants pension, inflation proofing or escalation of income and of course the payment of a Tax free lump sum, which can greatly help in those early years following retirement when a former employee retires and experiences a drop in salary