Final salary pension; You pay in '£x' per month, your employer (usually) pays in a bit more. If you work for 40 years (in the same pension scheme - they are not transferable to another employer) when you retire at (normally) 65 your pension will be 40/60ths, or 2/3, of the salary you were on when you retired.
If you don't have 40 years service in the same scheme when you retire, or if you retire early, your pension is reduced accordingly (in the latter case quite severly, as you will pay in less and be drawing out for longer by taking the pension early).
The beauty of these schemes is that they provide 'defined benefits' - that is, you know how much pension you'll receive. But that is also their downfall - becuase people are living longer and therefore drawing more money out, the sums no longer add up and the schemes do not gather enough money to pay the pension. This has been made wprse by Gordon Brown hitting such schemes with tax and accounting liabilities that were not known about when they were set up.
Pretty much all private sector final salary schemes have therefore closed to new members or closed altogether. Only the public sector and unusual sectors like rail still have them in abundance - but that is unsustainable and will change, just as it has in the private sector.
