Finance

Pension: How do pay cuts impact your final salary pension?

How to work out your final salary pension

If you have saved into a final salary pension scheme during your career, it will provide you with an income for your retirement based on the above factors.

The pension income is worked out as follows: your years in the scheme, divided by the accrual rate and multiplied by the pensionable earnings.

For instance, if your final salary is £30,000, you worked for your company for 40 years and your company uses an accrual rate of 1/60th, your annual pension would be £20,000.

This figure is calculated by 40 x 1/60th x £30,000.



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