Pension Definitions

Definitions:

Defined benefit: A defined benefit pension is a type of workplace pension scheme. The money you get when you retire is based on your salary and the number of years you’ve been in the scheme. There are two basic types: final salary and career average. 

CARE: A career average revalued earnings (CARE) pension scheme is where your pension is calculated based on your average salary over your entire career, not just your final salary. The pension earned in each year of service is uprated each year (by the agreed amount, often in line with inflation) and then added together to form the final pension that you will receive on retirement.

Defined contribution: With a defined contribution pension, you build up a pot of money you can use to give you an income in retirement.

Default employee contributions: You have a choice of how much you contribute, but if you don’t choose then you will contribute the ‘default’ amount. If the default doesn’t suit you, you can choose from the other options.

Salary sacrifice: contributions are paid through a salary sacrifice arrangement whereby you agree to give up part of your salary in exchange for the University making all pension payments for you. This arrangement is designed to make pension contributions more efficient and will reduce National Insurance (NI) costs for colleagues and the University