Hello, I'm Natalie Davison, Head of Advice and Guidance Operations at Standard Life.
Every day, I work with teams that talk to our customers, supporting you in planning for the future you want.
Today, I'm answering a question we often get asked.
"What is a defined benefit pension plan?"
Defined benefit plans, also known as final salary schemes or career average plans, give you a guaranteed and pre-agreed amount of money.
How much you get is determined by the rules of the pension scheme.
The amount is calculated using your salary when you retire or leave the scheme, or your average salary over your career.
Your employer pays into the plan and you might too.
It's up to your employer and the scheme's trustees to ensure there's enough money to pay you what you're entitled to.
So the investment risk and the decision-making sits with them.
With a defined benefit pension, you normally get a monthly payment for life, or a tax-free lump sum and a smaller monthly income.
Some schemes might give you the option to take all of the money as a lump sum, and even take 25% of that tax-free.
So there you have it, a quick overview of defined benefit pension plans.
