Final salary pension transfer specialists
Defined benefit transfers require a specialist adviser with specific FCA permissions. We introduce you to one — and to advice that starts from the position that staying in your scheme is usually right.
A final salary pension — more properly a defined benefit scheme — pays a guaranteed income for life, usually rising with inflation, often with a pension for your spouse after your death. Your employer, not you, carries the investment risk.
In exchange for giving that up, schemes offer a cash equivalent transfer value (CETV). Six-figure sums are common, and next to an annual pension figure they can look enormous. That comparison is misleading: you are being offered a lump sum to take on risk and longevity yourself.
The FCA's position is that a transfer is unlikely to be suitable for most members. Any adviser who begins from a different assumption is one to walk away from.
What your transfer value really represents
- A CETV is the scheme's estimate of what it would cost to provide your benefits elsewhere. It is not a measure of what those benefits are worth to you.
- The relevant question is what investment return you would need to achieve, every year, to replicate a guaranteed inflation-linked income for the rest of your life — and your spouse's. That figure is often higher than a sensible portfolio can be expected to deliver.
- A specialist adviser calculates this explicitly, so you can see the required return in black and white rather than guessing.
The narrow cases where a transfer can be justified
- Shortened life expectancy. A guaranteed lifetime income is worth less if it will be drawn for a short period, and a transfer may leave far more to your family.
- No dependants and a strong preference for inheritance. Defined benefit pensions rarely pass on well; a transferred pot can.
- Substantial other guaranteed income. If your essential spending is already covered for life, you may genuinely be able to take risk with the rest.
- Serious concerns about scheme funding. Worth examining, though the Pension Protection Fund provides a significant backstop.
The protections you are entitled to
- Advice is a legal requirement for transfers valued above £30,000, and only firms holding the FCA's pension transfer specialist permission may give it.
- Your adviser must produce a transfer value comparator showing the cost of replacing your benefits.
- You should expect to be told no. A firm that recommends transfers as a matter of course is a warning sign, not a convenience.
- If advice turns out to have been unsuitable, you have recourse to the Financial Ombudsman Service and potentially the FSCS.
Questions we get asked
Talk it through — free, and with no obligation
A short conversation with an FCA-regulated adviser will tell you where you stand. There is no cost and no pressure to proceed.