Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Pensionable service definition

What does Pensionable service mean? Pensionable service is the period of a member’s employment that counts under a defined benefit occupational pension scheme when working out the member’s accrued pension and any related benefits. In practice, it is set by the scheme’s trust deed and rules and typically runs from the date the member joins the scheme to the date they leave pensionable employment, reach the scheme’s normal pension age, or the scheme closes to future accrual. It usually excludes service before joining and certain unpaid absences, may treat part‑time work on a pro‑rata basis, and can include transferred‑in rights or added years where permitted....

Cash balance pension schemes: benefit designs, risk-sharing, money purchase definition changes, transitional provisions, scheme funding, PPF eligibility and compensation, revaluation, pension increases, and tax and annual allowance treatment

Published by a LexisNexis Pensions expert

Practice notes

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What is a cash balance scheme?

Put simply, a cash balance pension scheme is an arrangement where a member accumulates a guaranteed pot of money during their Pensionable service, which is then used to provide retirement benefits. When the member retires, this pot is generally applied to buy an Annuity (or to deliver other retirement benefits) on whatever terms can be obtained in the market at that time. This kind of scheme blends features of a Defined benefit (DB) arrangement with aspects of a Defined contribution (DC) arrangement. That mix is important because it influences how the risks inherent in any pension arrangement are shared between the member and the sponsoring employer, as explored in this Note.

Benefit structures

Cash balance schemes come in different forms, but they broadly fall into two categories depending on how the retirement cash sum is calculated:

the first is where the cash sum is determined by reference to the member’s service and their final salary at retirement (or the earlier date of leaving)...

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Michael Collins

Gateley Legal

Michael advises employers and trustees of occupational pension schemes on all aspects of pensions law as well as dealing with pensions issues on corporate transactions. He also provides legal advice to executive pension providers and other pension professionals. Michael is well placed to advise on all pensions-related issues, having advised clients ranging from owner-managed businesses in relation to their executive pensions to the multi-billion-pound pension funds of major international companies, including putting in place contingent assets (such as parent company guarantees or charges over property) in order to improve the security of pension scheme benefits and reduce levies payable to the Pension Protection Fund. ...

Web page updated on 21/05/2026

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