Defined Benefit Pension Transfer

This is one of the longest stages.

Once you have returned your enquiry form, we contact your pension provider(s) requesting all the information we need to advise you, such as how much money you have in it and technical data about escalation* and revaluation** rates etc.

Even if you provide us with some of this information, we will still need to check the details with your scheme and gather anything outstanding.

Workplace Pension Scheme (WPS):

We will also need to get details about your most recent WPS, this is a requirement as we must consider it as one of the destination options if a transfer is to go head.

*Escalation is the rate your annual pension will increase/escalate when it is paid after you retire.

**Revaluation is the rate your annual pension will be revalued by from the date you leave the scheme up to the date you start receiving your pension.

This is a free service.

The first stage in helping you begin to understand your pension options.

While we contact your pension scheme, we’ll also send you general educational information outlining the risks of transferring a defined benefit pension and key points to consider.

Our advisers are on hand to answer any questions you may have.

Once you’ve reviewed the Triage information and confirmed your understanding, we’ll arrange a call at a time that suits you to discuss your personal circumstances and what you’re looking to achieve.

This is a free service.

At this stage, we’ve received most of the information from your pension scheme. We’ll provide advice based on your current pension and personal circumstances, but we cannot consider where the pension might be transferred to.

The outcome will be one of two things:

• A transfer is not advisable, or
• We can’t determine suitability without proceeding to Full Advice.

Read our Guide to Abridged Advice for a more details.

If you decide to move forward to Full Advice after receiving your Abridged Advice report, we’ll need your written consent.

This stage involves a fee, regardless of whether a transfer goes ahead.

Once we have your written consent, a fully qualified FCA-regulated adviser will conduct a full analysis of your case, including detailed reports and pension projections***.

The same adviser will review the findings, make a final recommendation, and arrange a call with you to explain everything and answer your questions.

Please note, our default position is that a pension transfer is unlikely to be suitable unless clearly in your best interest.

***Illustrations show how your pension might perform if transferred and invested, factoring in all costs and charges.

We will send you a clear and easy-to-understand report that outlines our final recommendation, along with all the paperwork needed if you decide to proceed with a transfer. This allows you to make an informed decision with all the facts.

Insistent Clients:

If our advice is not to transfer your pension, perhaps because you do not currently need to or because keeping the guaranteed pension is more suitable, you may still ask to go ahead as an Insistent Client.

Please note, we are not required to accept this request and will assess each case individually.

Read our Guide to Insistent Clients for more details.

This is one of the longer stages of the process.

Once we receive your completed application forms, we contact your old pension scheme to begin the transfer. This part can take time, as it depends on how quickly your scheme’s administrators process the request.

We will keep you updated throughout, but please note this stage is largely outside our control.

Most people choose to take only their tax-free lump sum, leaving the rest invested for later.

If you have requested a payment, we will arrange for the funds to be transferred directly to your bank account once the pension transfer is complete.

If another financial adviser introduced you to us and you wish to continue working with them, we will automatically switch the contract agency back to them for ongoing advice, provided we have your signed authority.

The amount you receive is based on your length of service and your salary while working for your employer. Both you and your employer contributed to the scheme, with the employer typically paying a much larger share. When you retire, your pension is paid regardless of how the underlying investments perform, as the company is responsible for meeting the promised payments.

Even after you leave the job, your pension usually increases each year to keep pace with inflation, helping it maintain its value until retirement.

Transferring out of a DB scheme means giving up these guarantees and protections. While a transfer can offer more flexibility, it also means taking on investment risk yourself and could result in a smaller pension. This is a major decision and should only be made after receiving professional financial advice.

Defined Benefit schemes provide a guaranteed income in retirement, backed by your employer and protected by law. You do not need to manage investments or worry about turning your pension into income, as this is all taken care of for you.

They also offer some protection against inflation and usually provide a pension for your spouse or partner after your death.

• You will lose a guaranteed, inflation-protected income for life.
• You take on investment risk, which was previously borne by the scheme.
• Your pension pot could fall in value if investments perform poorly.
• Taking a lump sum early may reduce your long-term retirement income.
• You will need to pay for regulated financial advice.
• You must fully understand the risks of swapping safeguarded benefits for flexible ones.
• The value of your pension pot may go down due to poor performing investments.
• You give up the protection offered by the Pension Protection Fund

Your CETV is guaranteed for three months from the date it is calculated.

What are the risks of missing a guarantee date?

If the transfer is not completed by the guarantee date, the CETV must be recalculated. This often comes with a fee, usually around £350, although some schemes charge more. You are not required to proceed and can choose to stop at this point to avoid the fee.

The new CETV may be higher or lower. If it is lower, you could receive less money, which may affect the advice you are given. A transfer that was previously recommended might no longer be suitable.

If you decide not to transfer and leave your pension as it is, your existing benefits are not affected. No financial loss occurs unless a transfer takes place.

The main types of safeguarded benefits include:

• Defined Benefit or Final Salary schemes
• Pension policies with Guaranteed Annuity Rates (GAR’s)
• Pension policies with Guaranteed Minimum Pensions (GMP’s)
• Pension policies offering a promised level of income in the future or guaranteed minimum level of income.

Guaranteed Annuity Rates (GAR)

A GAR ensures that your pension fund will convert into a guaranteed lifetime income at a set rate when you retire. These rates are often higher than those available on the open market, but they can limit your income options. The value of your fund may still go up or down, so the final income is not fixed.

Guaranteed Minimum Pensions (GMP)

A GMP guarantees a set income at retirement, regardless of how much your fund is worth. If the fund is not enough to cover this income, the scheme must cover the shortfall. This makes GMPs valuable but may also limit your ability to transfer the pension.

Promised Income Policies

Some older personal pension policies promise a fixed or minimum level of income based on the contributions made. These are similar to GARs but typically offer more flexibility if your fund grows enough to provide a higher income.

Why These Guarantees Matter

These types of benefits provide certainty about your retirement income and shift the investment risk to the pension provider. In many cases, you know exactly what you will receive, regardless of how markets perform. This level of security is often difficult to replace and should not be given up lightly.

Many schemes, particularly in the public sector, are underfunded and struggle to meet future liabilities. As a result, many employers no longer offer Defined Benefit pensions to new staff.

If you are thinking about transferring your pension, it is important to check whether you are eligible for an enhanced transfer value or incentive.