What is a Defined Benefit Pension?

A Defined Benefit (DB) Pension is a type of post-Retirement Pension that will pay an annual income (mainly paid monthly) for the rest of the policyholder’s life.

This Income may be fixed or indexed up (by a certain % or benchmark) each year. Any indexation may be at the discretion of the Issuer / Pension Provider

Some DB Pensions come with a Survivor’s benefit; for example, 50% of the original income would get paid to the Surviving Spouse. Certain DB Schemes may also come with a fixed term pay-out (such as 5 years) should the pensioner die in the aftermath of first drawing down the DB Scheme.

DB Pensions do not form part of your Estate on death; the incomes dies with the pensioner. This contrasts to DC Pensions, which can pass on to the Estate in the event of there being surplus capital passed on.