0 used to describe a pension that is calculated according to the amount of money that somebody is earning when they stop work: --
He was in an excellent final-salary occupational scheme.
There is a built-in pre-award dynamism on the individual's earning record as a fundamental part of the final-salary type provision.
I concede that a minority of pension schemes are final-salary schemes.
First, there are company pension funds—occupational pensions that are final-salary schemes.
The cumulative effect is that many pension funds are phasing out their generous final-salary schemes and introducing instead money-purchase schemes.
I wanted to say a word about final-salary pensions, but that will have to wait for another day.
The evidence is that people with money-purchase schemes work longer, whereas people with final-salary schemes tend to end work earlier.
The simplest example is to be found in the formula for final-salary-type schemes.
It is likely that, within 10 years, the proportion of pensions that are not in a final-salary type of scheme will be the majority.
