To transfer or not? When it comes to Defined Benefit pension schemes, that is the question.

February 2nd 2017

Defined Benefit Pension Schemes (DB) are the Rolls Royce of pensions. These gold-plated pensions give a defined level of inflation-proofed income in retirement. However, like a Rolls Royce they are very expensive, which is why most employers no longer offer them to new employees.

The standard pension is a Defined Contribution (DC) pension, which is essentially an individual investment contract.  These are cheaper to fund and usually give a lower income in retirement.  Apart from Public Sector schemes, it’s possible to transfer a Defined Benefit pension, but the default advice is nearly always not to do so.

Recently, increased longevity and record low annuity rates have meant that transfer values of Defined Benefit pension schemes are historically very high.  Combined with new Government pension freedoms legislation, an increasing number of people are taking advantage of the opportunity to transfer to an individual arrangement.

Any existing or paid-up member of a Defined Benefit pension scheme can request a Cash Equivalent Transfer Valuation (CETV) from their Scheme Administrator, once a year for no charge.  The CETV is the amount the scheme will offer the member to give up their membership of the DB scheme.  As CETVs can be requested free once a year, it is worth having a look.


The article is for information purposes and does not constitute any form of financial advice. Moving benefits from a Defined Benefit Pension Scheme will mean giving up guaranteed benefits and will require advice from a suitably qualified financial adviser.

Hugo Cannon 3

Hugo Cannon

Independent Financial Adviser

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