Transfers From Defined Benefit Pension Schemes

For many years now, transfers out of a defined benefit scheme have been strictly taboo. However, for a number of reasons, that stance is gradually changing.

A Defined Benefit pension scheme is a particular type of scheme run by an employer for the benefit of its employees. They are also known as Final Salary Schemes. It promises to pay an income in retirement which usually increases in payment. If the individual dies, some of the rights to the income typically pass to a surviving spouse in payment, but there is usually no pot of money to pass on to the next generation.

It is because of this gold-plated nature of such schemes that transferring the money into a private arrangement – where the income is dependent upon investment returns – has long been a no go area.

That hard line has recently softened. Transfer values are impacted by interest rates, and because rates are so low, in some circumstances the fund values have risen significantly.

The starting position on defined benefit schemes is still going to be that taking the guaranteed income is the best thing to do, especially if that income is going to form the bedrock of retirement income. However, if the transfer value is generous enough and there are other compelling reasons why having a pot of money is preferable to the secure income, the benefits of transferring should be assessed.

Ovation are well placed to advice on such issues for two reasons.

  • We have Pension Transfer Specialists within our team (a specific designation from the regulator, the FCA)
  • We believe in coaching and life planning before giving investment or pensions advice

This means we can help people take a wider view on their various assets, including any defined benefit pensions.

The advice may well still be to keep the pension schemes, in fact it often will be. But it’s good to know that there are now other options to explore.

But remember – guaranteed benefits are not given up lightly, so it is essential that expert advice is sought.

Blog: How Can A Financial Adviser Help You Be Happy?

One truth that comes from the study of financial wellbeing is that we don’t generally know what makes us happy. How can we become more aware of our own wellbeing, and what are the barriers we need to overcome? Society’s Barriers To Happiness Strange as it may seem, life in our Western societies are not … Continued

Posted by:
December 8, 2019

Episode 58 – Interview with Anthony ‘Tas’ Tasgal

Episode 58 – Interview with Anthony ‘Tas’ Tasgal David and his co-conspirators Chris and Producer Tommo have a chat with author and strategist Anthony ‘Tas’ Tasgal about our behaviours and how we make decisions. Tas looks at changes that can be made for better money decisions with some fun exercises. Be sure to play along! … Continued

Stay in touch: News & Views from Ovation Finance


Sign up to get the latest news and views from the Ovation team straight to your inbox with the InnOvation Newsletter.


*We will never give out information to a third party