How the plan works

For each year (or part year) that you contribute to the pension scheme you accrue a pension based on a particular formula as set out in the relevant GAD Certificate.  These are too numerous to set out in this site but typically it could be that for each year of service you accrue 1/60th of your pensionable salary at retirement.

Again definitions of pensionable salary are too numerous to set out but typically it would be your best basic salary in any one year during the 10 years before leaving. So if your best basic salary is £15,000, pensionable salary would be £15,000.

For each year of pension scheme membership you could accrue 1/60 x 15,000.

If you have 30 years of pension scheme membership this would be 30/60 or half of pensionable salary, so in the example you would have a pension of £7,500 a year.

This is known as a defined benefit or salary related scheme.  Over and above your contributions, the Company pays into the scheme whatever contributions are required in order to meet this benefit "promise".