A career average pension or career average revalued earnings pension (CARE pension) is a type of

occupational pension A pension (, from Latin ''pensiō'', "payment") is a fund into which a sum of money is added during an employee's employment years and from which payments are drawn to support the person's retirement from work in the form of periodic payments ...

scheme, where people saving for retirement pay for a benefit after retirement where they will receive a sum that is calculated according to their average earnings over their career. Particularly in

UK pensions Pensions in the United Kingdom, whereby United Kingdom tax payers have some of their wages deducted to save for retirement, can be categorised into three major divisions - state, occupational and personal pensions. The Sovereign state, state pen ...

, this model has been introduced as an alternative to both

defined contribution A defined contribution (DC) plan is a type of retirement plan in which the employer, employee or both make contributions on a regular basis. Individual accounts are set up for participants and benefits are based on the amounts credited to these a ...

pensions, which may run out and lead to old age poverty if they live longer, and

final salary pension Defined benefit (DB) pension plan is a type of pension plan in which an employer/sponsor promises a specified pension payment, lump-sum, or combination thereof on retirement that depends on an employee's earnings history, tenure of service and age, ...

s which give people a benefit based on the last salary they earned before retirement. It is thought that career average pensions are fairer than final salary pensions, when people have not, for instance in their last few years of work, jumped up to management positions with much higher salaries: career average pensions mean that lower earners do not subsidise much higher pension benefits for just a few people. UK

public sector The public sector, also called the state sector, is the part of the economy composed of both public services and public enterprises. Public sectors include the public goods and governmental services such as the military, law enforcement, infra ...

CARE pensions are revalued annually in accordance with rates issued by

His Majesty's Treasury His Majesty's Treasury (HM Treasury), occasionally referred to as the Exchequer, or more informally the Treasury, is a department of His Majesty's Government responsible for developing and executing the government's public finance policy and eco ...

under the Public Service Pensions Act 2013.Explanatory Memorandum to the Public Service Pensions Revaluation Order, 2018
accessed 12 May 2018

References

See also