Definitions for "Final Salary Scheme"
A pension scheme providing pension benefit by reference to the scheme member's salary at or near retirement.
Most occupational pension schemes still calculate the pension as a percentage of final salary (maximum 40/60ths), also known as a defined benefit scheme, although are changing more and more to money purchase schemes.
The calculation of your pension on retirement is based on a fraction of your pensionable earnings for each year you've been a member of the pension scheme. The most common fraction used is 1/6th and if you had been a member of the scheme from the age of 25 to 65 ,this would give you the maximum pension of 40/60 or 2/3 of your final salary.The fewer years that you are in the scheme means a smaller pension. It is usual for the pension to get regular increases and a provision is usually made for a pension for your spouse if you die first, or if you die before the retirement payment of the one-off payment.