If you’ve found this article, it’s highly likely that you have a Defined Benefit (DB) pension scheme and are wondering whether you should transfer it. My name is James Murray, CEO and Founder of Cameron James. Having been in the industry for over fifteen years, I am here to share everything you need to know about DB pension transfers.
We publish two to three informative videos every week, covering important topics like UK Pension Transfers and Defined Benefit (DB) advice. Our goal is to ensure you’re fully educated and confident before ever speaking with an Independent Financial Adviser. Visit our YouTube channel and subscribe to stay ahead with the latest expert guidance on DB pensions and more.
Why is Transferring DB Pension an Important Decision?
Transferring a DB pension is a significant decision. If you have a safeguarded asset worth over £30,000, you are legally required to seek professional advice before making a transfer decision. Even if it wasn’t legally required, I would still strongly recommend that individuals seek expert advice before transferring out of a DB pension scheme. However, even if it weren’t mandatory, taking professional advice is essential.
“95 out of 100 people, based on our experience, are being advised to maintain their DB pension. That means no pension transfer. Keep it inside the DB scheme and take all the benefits—the uplift, indexation, the final salary you're going to get—because that will continue to grow over time.”
For the vast majority of individuals, keeping their DB pension is the best financial decision. One of the strongest arguments against transferring a DB pension is the guaranteed income for life that it provides. Unlike investments in stocks and bonds, which fluctuate based on market performance, a DB pension removes the risk and ensures that you receive a reliable monthly income, regardless of how the economy performs.
Your pension is designed to grow over time, typically in line with inflation measures such as CPI or RPI, ensuring that your purchasing power remains intact even decades into retirement. However, in rare cases—such as serious ill health—there may be a rationale for transferring out.
Why Might You Consider Transferring DB Pension?
Despite the benefits of a DB pension, some people still choose to transfer. Below are some common reasons why individuals consider a pension transfer:
1. Flexibility in Retirement
A DB scheme provides a fixed income from age 60 or 65. While this is great for some, others prefer more flexibility. Some individuals, for example, may want to retire earlier, say at 55, to enjoy their “golden years” with family, travel, or hobbies. Transferring to a Defined Contribution (DC) scheme allows for customized drawdowns that fit their lifestyle goals. This is often referred to as front-loading retirement income to maximise the “golden years.”
For example, One might choose to draw £50,000 annually for the first ten years of retirement to fund travel, leisure, and time with grandchildren, then reduce that amount to £30,000 annually over the following 20 years as their lifestyle needs change. This approach lets them make the most of their active retirement years while adjusting later for more modest spending.
2. Inheritance and Estate Planning
One major downside of a DB pension is that it may not pass on to children after both spouses pass away. Typically, a spouse receives 50% of the annual pension, but beyond that, the fate of the remaining pension is at the discretion of the scheme’s trustees. This uncertainty makes some people uneasy. Those who wish to have more control over their legacy may opt to transfer to a scheme that allows for inheritance planning.
“Emotionally, clients do not like the idea that they’ve built up a £1 million DB pension, but if they and their spouse were to pass away together, that pot may not go to their family.”
In contrast, transferring into a SIPP or DC scheme allows you to pass on any remaining pension funds to your children or other beneficiaries.
3. Control Over Investments
A DB scheme does not require investment decisions from the pension holder—everything is managed by the scheme trustees. Some individuals, however, prefer to have control over their investments and take on more risk. A well-diversified DC scheme has the potential to outperform a DB pension, although there are no guarantees.
Some people are comfortable taking on more investment risk in exchange for the potential to outperform a DB scheme. A DC scheme provides investment flexibility, allowing pension holders to choose where their money is invested and potentially grow their capital. However, it also exposes them to market volatility and the risk of poor returns.
How the DB Transfer Process Works
Many people are hesitant to explore DB transfers due to concerns over complexity. However, reaching out for professional guidance does not commit you to anything.
The DB transfer process generally involves:
- Obtaining a CETV – This tells you the lump sum value of your DB pension if transferred.
- Reviewing Scheme Details – Understanding the benefits you currently have and their potential growth.
- Full Cash Flow Planning – Analysing how a transfer aligns with your long-term financial goals.
- Receiving a Transfer Report – A legally required document detailing the recommendation.
- Making the Final Decision – If advised to transfer, the pension specialist facilitates the move.
Final Thoughts – Should You Transfer or Stay?
The decision to transfer your DB pension is one of the biggest financial choices you’ll ever make. While 95% of people are advised to stay within their scheme, those who value flexibility, control and estate planning may still choose to proceed.
Before making a move, it’s important to:
✔ Understand the long-term consequences of leaving a guaranteed scheme.
✔ Consult an FCA-regulated pension transfer specialist to ensure compliance.
✔ Evaluate your retirement goals and whether a transfer supports your vision.
The process is lengthy, often requiring months to gather necessary information, assess your situation, and complete all required paperwork. A pension transfer specialist will guide you through each step and help you make an informed decision.
If you’re unsure about your options, reach out to us at Cameron James. We will walk you through the process, answer your questions, and make sure that you’re making the best financial decision for your future.
Book your free consultation today by clicking here, and as always, take care of your UK pension assets!
Disclaimer: 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.