Defined benefit pension transfers

Also known as Final Salary Pension Transfers

We can’t emphasise enough how important it is to make the right decision when it comes to deciding to retain or transfer benefits held in a defined benefit pension scheme. 

Get the decision right and for many the results can be life changing; providing greater flexibility, allowing earlier retirement and potentially creating a valuable legacy. Get it wrong however and the results could create a financial disaster, running out of money before you die is a real risk if you spend too much at the wrong time or expose your fund to excessive risk.

Defined benefit pension transfers

A deferred member of a DB scheme will have built up pension benefits to become payable at the scheme retirement age. These will be based upon the salary that you had while employed and the number of years you worked for the company. There will also be a scheme accrual rate which determines how the number of years and salary figures are converted into pension benefits.

Under a DB scheme, the pension benefits payable at the scheme retirement age are fixed and guaranteed by the scheme and employer. There is no element of investment risk and as long as the scheme does not fail, the benefits will be paid as promised.

The transfer out of benefits from a DB scheme effectively exchanges this future promise of pension benefits for a cash lump sum, which represents the current value of the future benefits. This is known as a cash equivalent transfer value (CETV).

If you choose to transfer your pension, then it must be moved into a registered pension scheme (typically a personal pension), which is a form of defined contribution arrangement. You will cease to be a member of the DB scheme and cannot transfer back in the future; the decision is irreversible and as such must be carefully considered!

Did you know?

CETVs are only guaranteed for a 90-day period. Some schemes only offer one CETV quotation per annum, while other schemes will charge if a second value is required.

It is therefore important not to request a CETV before you have spoken to a professional as this could significantly reduce the time available to complete the analysis.

The Equilibrium defined benefit pension review service

It is apparent that the review of a defined benefit pension scheme is a highly complex area of financial planning advice, with multiple factors to consider. The design of our service has been based on the following key requirements:

  • Holistic: In our view, a defined benefit pension transfer should only be considered as part of a holistic review of your overall circumstances and objectives.
  • Educational: A lack of knowledge can lead to decisions being made without the implications being fully understood. We therefore want our clients to learn throughout the process and to be fully informed when the time comes to decide how to proceed. This will include a detailed overview of how investments behave for those with limited previous experience of investing.
  • Digestible: All too often we have seen reports produced by our peer group that contain in excess of 100 pages, are difficult to read and full of jargon. We have therefore broken our reporting down into four separate modules to make digesting our comments easier. This is explained further below. 

We have designed our review process to reach one of the following two outcomes:

Our advice is delivered in three initial modules, followed by a final recommendation confirming our conclusions.


We expect the review of your pension scheme to take between two and four months to complete. This is due to the amount of information we need to gather from you and the scheme and the complexity of the analysis.

The main time sensitive aspect of the process is after we receive the Cash Equivalent Transfer Value (CETV) from your scheme, as this will be guaranteed for a 90-day period. Unfortunately, many schemes do not provide all the info we need at the outset and slow to respond to further information requests which is one of the major factors which causes delays in the process. Some schemes will only issue one CETV per year, and others will charge for a new one. This means that we would prefer you do not request a CETV yourself as this could significantly reduce the amount of time we have to analyse your pension and make our recommendations.

Next steps

Call 0808 163 4571 or fill in the contact form on this page and we will aim to get back to you within 48 hours.

The information contained in this website should not be looked upon as advice or recommendation, clients should seek appropriate guidance from their financial planner.