Quick answer: A defined benefit (DB) pension promises a guaranteed income for life based on your salary and service — the employer bears all the risk. A defined contribution (DC) pension is a pot you invest, where your retirement income depends on contributions and returns — you bear the risk. DB is more valuable and predictable; DC is more flexible and inheritable.
Comparison
| DB | DC | |
|---|---|---|
| Promise | Specific income for life | A pot of money |
| Risk borne by | Employer | You |
| Inflation | Usually built in | You manage it |
| Inheritance | Usually 50% spouse | Full pot to nominees |
| Flexibility | Low | High |
| Examples | NHS, Teachers, LGPS, old final-salary | SIPPs, modern workplace pensions |
Why most private DB schemes closed
Rising longevity, low bond yields and strict funding rules made them too expensive; most private employers closed them between 2005 and 2020. Public-sector DB (NHS, Teachers, LGPS, Civil Service) remains open, mostly on a CARE basis since 2015.
Should you transfer DB to DC?
Usually no. You'd swap a guarantee for investment risk. Advice is legally required over £30,000, and the FCA's position is that most DB transfers aren't in the member's interest. Read next: DB transfers.
Frequently asked questions
A Defined Benefit (DB) pension promises a specific income at retirement based on salary and years of service. A Defined Contribution (DC) pension is a pot of money you invest, with retirement income depending on pot size and investment returns.
DB is usually better for predictability and longevity protection — your employer bears the investment risk. DC offers flexibility and inheritability. The choice is rarely yours; it depends on your employer's scheme.
Public sector DB pensions (NHS, Teachers, LGPS, Civil Service, Armed Forces) are still open. Most private sector DB schemes closed to new members between 2010 and 2020.
Usually no. DB pensions provide guaranteed inflation-linked income for life that's hard to replicate. Regulated advice is legally required to transfer DB benefits over £30,000 — and FCA data shows 70-80% of DB transfers are recommended against.
DB pensions are valued by the Cash Equivalent Transfer Value (CETV) — the lump sum you'd need to buy an equivalent income elsewhere. CETVs are typically 20-30× the annual pension; recent multiples have been 25-30×.
Yes — many people do. Public sector workers often have a main DB scheme plus AVCs in a DC scheme. Private sector workers may have an old DB pension from a previous employer plus current DC scheme.