Transferring out of an Occupational Pension

Making a Final Salary Pension Transfer can allow you to benefit from additional flexibilities when you retire. Defined Benefits Pensions, which are also known as Final Salary Pensions and ‘DB Pensions’ were provided by employers for a long period of time. They provide a guaranteed retirement income, offering certainty to retirees but, because they are very expensive and complicated to run, they are increasingly rare. Many Defined Benefit Pensions have now closed to new joiners.
Defined Benefit Final Salary Pensions provide a great deal of security but are bound by strict scheme rules governing how scheme benefits are paid. However, newer pensions provide far greater choice over how and when pension benefits can be taken thanks to changes made by the government, which is why some retirees now consider making a Final Salary Pension Transfer.

What is a Final Salary Pension Transfer?

A Final Salary Pension Transfer is the term used to describe the process of leaving a Defined Benefit Final Salary Pension Scheme and giving up the guaranteed benefits it provides for an agreed cash lump sum. This lump sum must be transferred to another qualifying UK Pension Scheme – normally a Personal Pension.
By giving up guaranteed benefits provided by the scheme, you receive greater control over your money, how you invest it, and how and when you take pension benefits to support your retirement. Depending on your financial circumstances, these added flexibilities may be important to you, although you may value the peace of mind and security of a known income in retirement. This is a complex area of financial planning and it is important that you understand the security you give up in return for these added flexibilities.

Why consider a Final Salary Pension Transfer?

There are a number of reasons that many people consider a Final Salary Pension Transfer. Some of the personal considerations that lead many people to consider transferring include:


Having a pension is critical to your long-term financial wellbeing and security. To encourage people to save and make the most of their pensions, UK government has introduced a range of flexibilities designed to give you greater control over your money. Known as ‘Pension Freedoms’, these changes allow you to take your retirement benefits as you see fit. This means you can turn your retirement income on and off, take a lump sum, or leave your pension to grow. Defined Benefit Schemes, on the other hand, have fixed retirement ages and do not allow you to vary your income or make choices about how you take your benefits.

Tax Planning

Final Salary Pensions don’t allow you to vary the income you receive from them. Depending on your financial circumstances and other incomes you receive, you may find you only need to dip into your pension from time to time. Many people are now choosing to work flexibly or part-time, retiring gradually rather than finishing work altogether. Thanks to Pension Freedoms, you can use your pension to top up income as you need to and plan your income so that you do not pay an unnecessary Income Tax.

Defined Benefit Schemes, however, will pay a defined regular payment that may mean you paying tax on income you don’t necessarily need to take.

Estate Planning

When you die a Defined Benefit Scheme will pay a reduced benefit to your spouse until their death or to a dependent child under the age of 23. Qualifying rules must be met for these payments to be made. Apart from this, the value of your pension is lost for good.

Death benefits are extremely rigid and, if you are not married and have no financially dependent children, your pension will probably die with you. Depending on your financial, family and personal circumstances and your state of health, making a Final Salary Pension Transfer may mean you can preserve a cash sum which can then be passed on to loved ones.

What you give up if you make a Final Salary Pension Transfer

In choosing to transfer your Company Pension to a Private Pension arrangement, you are making a significant and irreversible financial decision. For this reason, you should select a highly qualified Financial Adviser with specialist qualifications and expertise to advise you and undertake a thorough review of your circumstances.
Benefits of Company Pension Schemes that are lost on transfer include:
  • Guaranteed lifetime income:  Your pension income will last as long as you do
  • Spouse/Civil Partner/Dependants: Although schemes do vary, your pension will carry on paying an income to your spouse when you die. Your scheme documentation will tell you more
  • Inflation protection: The spending power of your pension is protected to some degree
  • Lower risk: Your pension income does not rely on stock market performance
  • No decision making: Once your pension starts, you will not need to do anything and it will be paid like a salary

Be ScamSmart – don’t fall victim to scams!

Because pensions are an efficient way to save for the long term, your pension pot may be one of the biggest financial assets you have. This could make you a target for scammers, so it is crucial you check who you are dealing with and know where to check if something doesn’t seem right. Always be alert to these warning signs:
  1. Reject unexpected offers: Be wary of cold calls – they are completely illegal
  2. Know who you are dealing with: When it comes to transferring large sums of money from your pension, always deal with a registered, professional financial adviser
  3. Check any contact details you are given: Some scammers ‘clone’ legitimate financial advisers’ websites to pass themselves off as the real thing
  4. Don’t be rushed or pressured: When something sounds too good to be true, it probably is. There should never be a need to rush – financial advisers are paid to get things right for you and ensure you feel comfortable and in control
  5. Get impartial information: Don’t let someone tell you what to do and take time to understand your options
We want you to plan your retirement securely and with confidence. To find out more about identifying pension scams, visit the Financial Conduct Authority’s dedicated ScamSmart website or contact us for help.

Make the right decision with confidence

Creative’s Wealth Management Team can connect you with a highly skilled and experienced Pension Transfer Specialist who can help you understand the merits of your existing Final Salary Pension and making a Defined Benefit Pension Transfer.

This is a highly complex area of financial planning that is only offered by the most qualified and experienced financial advisers. Additionally, if the value of your DB Pension is over £30,000, it is a legal requirement for you to seek personal financial advice.

Don’t risk making the wrong decision – contact us for more information.


Important information about transferring your Final Salary Pension

  • The transfer from a defined benefit pension plan is a highly complex process and is an irreversible action
  • A final salary pension is more likely to be suitable than transferring your pension
  • Transferring a final salary pension may have a detrimental effect on your retirement planning and is only suitable for some, not all persons

Connect with us

Want to reach a Financial Advisor about a Final Salary Pension Transfer?

Contact Creative here and we will connect you with an expert.

Make an enquiry

Wealth Management Services