@FridayButterfly “Defined Benefit” can be clearer to understand if you look at the 2 different pension scheme types and compare what the terms mean. Defined Benefit, and Defined Contribution.
When you have a pension, you have a definition (specification, agreement) either of what you are going to pay into it (Defined Contribution) or what you’re going to get out of it (Defined Benefit). So contribution is what money you contribute. Benefit is the money benefit you’re going to eventually get.
Many people have a Defined Contribution scheme. The only thing they know, is how much they are paying in. They will never know what they’ll get out. There are estimates of course - but there are risks, so nothing is guaranteed. That’s because you put your money into the pension scheme, and the pension administrators invest it into shares for you. And those can go up or down. There’s other things they can do, and you get some choice in it - but I’m keeping it simple. So you know for example that you’re paying in 5% of your salary, and so is your employer. But you don’t know what will be in that “pension pot” when you retire. So what has been “defined” is what your contribution is - not what benefit you’ll get.
Now in the NHS you’re lucky, because your pension scheme is the Defined Benefit type. So you know what you’ll get out - the benefit. As it happens, you also know what you’re contributing. But the great thing is, you’re contributing for a guaranteed outcome. That outcome, your benefit, is clearly defined. Simplified, it will be some like: for every year you work, 1/57th of your gross pay will be calculated. Then, every year that 1/57th will be increased by 2.5% to allow for inflation. And that will be paid to you every year for as long as you live. I’m giving 2.5% as an example, there is a clearly defined set of rules on what that % increase is - and if your employer wants to change it, the unions will push back. Usually any change will apply only to the future. So, say your salary is £57,000. At the end of this year, you have earned £570 per year (1/57th) to be paid to you when you turn 65 - and for every year of your life. After 2 years employment, you now have £1140 promised to be paid to you every year. And actually a little more, to keep up with inflation. This is your benefit.
The great thing is that your NHS pension has a defined benefit and it doesn’t matter if your contribution doesn’t cover it. What you pay in, is a contribution towards what you eventually get out. But if you end up paying in say £50K but the benefit you were promised ends up costing £100K to pay you… that’s not your problem. Because what you were promised was a specific (defined) benefit. Your individual contributions don’t add up to what you get back out.
If you’re thinking DB sounds great compared to DC, so why don’t we all have DB?! It’s because it’s so great, it’s really expensive, and most employers don’t offer them.
Hope that’s a little clearer for you. Lots of people on the Money section here will happily talk you through more.