Defined Benefit Schemes

A Defined Benefit (DB) scheme is a type of pension plan where your retirement income is determined by a formula, usually based on your salary and years of service. The employer guarantees a specific payout upon retirement, ensuring predictable income regardless of investment performance. The employer funds the scheme and manages the investments, bearing the investment risk. These schemes offer security for retirees but can be costly for employers to maintain. They are often found in public sector jobs and some private companies, providing lifelong retirement benefits that are typically adjusted for inflation over time.