Pension schemes will stipulate a certain age at which you qualify for a pension. The usual ages are 65 or 60 for men and 60 or 55 for women.
Is the pension fixed or escalating after retirement?
If the cost of living keeps on rising after you retire, your pension, if it is a static sum, will become less valuable in terms of spending power each year. Many pension schemes provide that pensions, once in issue, shall rise by a stated percentage (3% or 5% is common). Obviously a pension that is escalating has td start at a much lower level than a static one. Alternatively, or even additionally, the managers of the pension fund might increase pensions beyond these figures providing sufficient money is available in the pension fund. Frequently the employer will plough extra money from current profits into the fund to enable such increases to be made.
A final pay or final salary scheme provides a pension which is a proportion of final pay at or shortly before retirement. The proportion is calculated by allotting a percentage or fraction of final pay for each year of service, so that the pension will usually be larger than with an unrevalued average earnings scheme. Moreover, since most people's real salary rises with age, a 'final salary is usually a better basis than average salaries revalued.
You are entitled to a pension of 1.25% of final salary for each year of your service up to a maximum of 40 years. You retire... see: Final-Earnings Basis