What do I need to understand about a Defined Benefit Pension Transfer
Transferring a Defined Benefit (DB) pension is one of the most significant financial decisions you'll ever make. You have potentially a Defined Benefit Pension scheme, and you're trying to ascertain: Should I keep it, or should I transfer out? This is what the majority of our clients have been through and many of them have moved ahead with transfers, some of them have not.
As you'll see on all of your paperwork, scam guidance, and everything from the Financial Conduct Authority (FCA) and the government, you are giving up a safeguarded asset, which has a defined income in your retirement, guaranteed to grow at the rate of indexation. So, it is a very big decision to give up your Defined Benefit pension, and you need to make sure you do things correctly.
Cameron James is here to help you try to understand what you need to be thinking about. Kindly see below our latest YouTube video, focused on the topic of transferring a Defined Benefit (DB) pension scheme and what you need to think about.
Why do some people still Consider Defined Benefit Transfers?
The main thing you need to consider when thinking about transferring out of your DB scheme is: Why do you want to transfer your DB pension?
That is the very first question any pension transfer specialist will ask. If you say basic and generic things such as, I’ve turned 55 and now have access to my Defined Benefit pension, a pension transfer specialist will not take that as a strong rationale.
A well-thought-out answer should show that you have a good formulated plan. For example, you might say: “Yes, the reason I'm considering transferring my defined benefit scheme is because I understand I am giving up safeguarded income. However, this is the plan I have in place for the capital, which I cannot achieve if I stay in my defined benefit scheme.”
For instance, say you have a DB pension worth half a million pounds, but you need to pay for your children’s university fees totalling £100,000. You may want to access some of your tax-free cash to cover this financial burden, while leaving the remainder invested for retirement. However, this does not mean an automatic approval. In most cases, nine times out of ten, it is not in a client’s best interest to transfer a DB pension out of a DB scheme.
What is the The Role of a Financial Adviser in a Pension Transfer?
Many people ask: Is it my job to formulate a plan, or is that the financial adviser’s job? You might not have any idea yet whether you want to transfer or not. You might not have put much thought or effort into it, and certainly haven’t well formulated a plan.
The FCA has stringent guidelines in place to guarantee that individuals do not make poor financial decisions that could negatively impact their retirement security. This is where working with a financial adviser is crucial. You need to consider this before going through the entire process because the pension transfer specialist works on a non-contingent basis. The advice report fee has to be paid irrespective of whether you move ahead with the advice or not.
Another key part of this process is understanding that at Cameron James, we do not provide DB transfer advice in-house. Instead, all Defined Benefit pension transfer enquiries involving safeguarded benefits are handled by an independent, FCA-regulated Pension Transfer Specialist (PTS) firm. While we provide pension and investment advice under the 2-adviser model, we do not determine DB transfer suitability. The PTS firm operates independently, ensuring that clients remain under its regulatory jurisdiction.
Finding a Financial Adviser You Can Trust
Finding a financial adviser you can trust is crucial. Trust is a word that’s thrown around a lot in the industry. It takes years to build and only one instance to lose. In financial advice, this is never more true. No matter how many YouTube videos you watch or articles you read, you will almost certainly never understand DB pension transfers as well as a financial adviser or a pension transfer specialist.
Before making a decision, conduct thorough due diligence. Check the adviser’s credentials, fee structure, and approach to long-term financial planning. Make sure you trust your adviser because over the next 10 or even 20 years, they will be giving you a lot of advice. You must feel comfortable that their advice is in your best interest and not just about putting money in their pocket.
By transferring, you are taking on all of the investment risks
If you need stability and guaranteed income, staying within your DB scheme is often the best option. If, however, you have significant additional assets and can afford to take a more aggressive investment approach, a transfer might be more viable. One of the biggest red flags in pension transfers is when a client has a low-risk tolerance but is considering moving into a higher-risk investment environment.
If you consider yourself a highly conservative investor but are looking to transfer your DB scheme into a stock market-based SIPP, potentially, there might be a disconnect between your risk tolerance and investment choice.
Of course, there are exceptions, such as ill-health, serious financial difficulties, or debt, but in general, if you want to invest conservatively and still transfer your DB pension, the outcome is likely to be poor. UK DB schemes typically guarantee 3-7% growth, which can be difficult to beat in a SIPP.
Despite the risks, there are situations where transferring a DB pension is the right move. If you have substantial assets and do not rely on your DB pension for income, transferring could allow you to take greater control of your investments and estate planning.
For example, some clients transfer to ensure their pension benefits can be passed on to their children or grandchildren. While this is a valid motivation, pension transfer specialists often see this as a red flag because DB pensions were not designed as an inheritance vehicle.
What is The Cost of a Defined Benefit Pension Transfer in 2025?
Cost is extremely important. Many advisory firms have high underlying fees, particularly if they use Discretionary Fund Managers (DFMs) who can charge an additional 0.7%-1% on top of financial adviser fees. By the time you add in platform and investment fees, total costs can exceed 2% per year. Some international clients have faced even higher fees, up to 4%-5% annually, often without realising it.
At Cameron James, the pension transfer specialists we work with charge a minimum fixed report fee of £3,750, depending on the pension size. Our implementation charge is 1-3%, and our ongoing management fee is 1% per annum.
You can find our costs in detail here.
Keeping safe and Avoiding Scams
Transferring a DB pension is a decision that cannot be reversed, so it must be approached with extreme caution.
“If a financial adviser is pressuring you to sign documents quickly, or if you haven’t had a Zoom call or face-to-face meeting with them, that’s a major red flag. Take your time, do your due diligence, and ensure that any transfer is genuinely in your best interest.”
At Cameron James, we help clients make informed decisions by working with FCA-regulated pension transfer specialists who provide truly independent advice. If you are considering a DB transfer, book a consultation with us today to discuss your options and receive a clear, professional assessment of your financial situation.
As always, take care of your UK pension assets…
Book your free consultation here!