Defined Benefit Transfer Calculator

What is my defined benefit pension transfer worth?

The short answer: your Cash Equivalent Transfer Value (CETV) is roughly your annual defined benefit pension multiplied by a factor your scheme's actuary sets – and in the 2026 interest-rate environment that multiple typically sits around 20–25 times the yearly pension. A deferred pension of £10,000 a year might therefore attract a CETV somewhere in the region of £200,000 to £250,000. These are estimates: the only figure that matters is the formal CETV your scheme issues, which is guaranteed for three months once quoted. This calculator exists to give you realistic expectations before you request that statement – and to make one legal point unmissable: if your CETV is worth more than £30,000, you cannot transfer without taking advice from an FCA-regulated pension transfer specialist, and for most people that advice will conclude that staying put is the better outcome.

Transfer values have fallen a long way from their peak. In the ultra-low-yield years around 2021, multiples of 30–40 times were routinely quoted, and headlines about six-figure windfalls tempted many savers out of gold-plated schemes. Since gilt yields rose sharply from 2022 onwards, schemes need far less money today to fund the same lifetime promise, so CETVs contracted accordingly. If you were quoted a figure years ago, do not anchor to it – today's offer is likely to be materially lower for the same pension.

How a CETV is actually calculated

Your scheme actuary starts with the pension you built up, projects what it will cost the scheme to pay it (with all its attached promises) from your normal retirement age for the rest of your life, and then discounts that cost back to a single lump sum today. The main moving parts are:

• Gilt yields and the scheme's discount rate. The higher the yield the scheme can assume on its assets, the less money it needs to set aside now – so CETVs fall when yields rise. This is the single biggest reason multiples dropped from 30–40× to roughly 20–25×.
• Your age and distance from retirement. CETVs generally drift upwards as you approach the scheme's normal retirement age, because there is less time for discounting to shrink the value.
• Inflation linking. Pensions with generous RPI-linked increases cost more to provide than those with capped CPI increases, so they command higher transfer values.
• Attached benefits. A spouse's or dependant's pension, guaranteed periods and revaluation in deferment all add cost, and therefore value.
• Scheme funding and insurance. A poorly funded scheme may apply a reduction (an “insufficiency report” haircut) to transfer values; a well-funded one will not.

You have a statutory right to request one free CETV every 12 months if you are a deferred member more than a year from normal retirement age. Additional quotes inside the same year can carry a charge. Once issued, the figure is normally guaranteed for three months – the window in which any advice process and transfer paperwork must complete if you want the quoted amount.

Worked example

Sarah, 52, has a deferred pension of £12,000 a year from a former employer's final salary scheme, payable from age 65 with CPI-linked increases and a 50% spouse's pension. Using a mid-range 2026 multiple of 22×, her estimated CETV is 12,000 × 22 = £264,000, with a plausible range of £240,000 (20×) to £300,000 (25×). Because that is far above £30,000, regulated advice is compulsory before any transfer. The calculator also shows the sobering comparison: drawn at the rough 4% rule of thumb, a £264,000 pot supports about £10,560 a year – less than her guaranteed £12,000, with none of the inflation protection, none of the spouse's cover, and with investment and longevity risk now sitting entirely on her shoulders. Had she been quoted at the 2021 peak, the same pension might have attracted £400,000+; that asymmetry is precisely why the FCA treats these transfers so cautiously.

When FCA advice is compulsory – and what it involves

Since April 2015, the law (Pension Schemes Act 2015) has required anyone transferring safeguarded benefits worth more than £30,000 to take advice from a firm with the FCA's pension transfer specialist permissions. Your trustees cannot pay the transfer until they have seen evidence the advice was given – and note the requirement is to take advice, not to follow it, although many receiving schemes will refuse a transfer made against advice.

Two other protections matter. First, contingent charging is banned: since October 2020 advisers cannot charge only if the transfer proceeds, removing the incentive to wave everything through. Second, many firms offer abridged advice – a shorter, cheaper check that can end in either “do not transfer” or “unclear, full advice needed”, but can never recommend a transfer by itself. Full transfer advice is a significant piece of work; fees vary widely by firm and case, commonly a fixed fee or a percentage of the fund (as a rough estimate, often several thousand pounds – confirm exact costs before engaging). Transfers out of unfunded public sector schemes (NHS, Teachers', Civil Service, Armed Forces, Police, Fire) to flexible arrangements have been banned outright since 2015; funded schemes such as the Local Government Pension Scheme still permit them.

Why staying put is usually the right answer

The FCA's official starting assumption is that a DB transfer is unlikely to be suitable for most people, and its supervisory work over the British Steel episode showed how much harm unsuitable transfers cause. What you give up is easy to underestimate:

• A guaranteed income for life, however long you live – you cannot outlive it, and no market crash can cut it.
• Inflation protection, through revaluation in deferment and annual increases in payment.
• A spouse's or dependant's pension, typically 50% or more, with no underwriting.
• The Pension Protection Fund safety net if your employer fails – compensation at 100% of pension in payment (or 90% for those below the scheme's pension age when the employer becomes insolvent).

Situations where a transfer can genuinely merit consideration do exist: serious ill health with a shortened life expectancy, no spouse or dependants to benefit from survivor pensions, substantial secure income from elsewhere so the DB pension is genuinely surplus, or an unmanageable scheme-specific problem. Deciding whether you are truly in one of those camps – against the pull of a large-looking lump sum – is exactly what the compulsory advice is for. Treat the number this calculator produces as context, never as a recommendation.

Common mistakes with DB transfer values

• Anchoring to a 2021-era quote. Multiples of 30–40× are history; expecting them today leads to disappointment and, worse, to rushing a decision when a “better than feared” offer arrives.
• Comparing the lump sum with your salary rather than with the income it must replace. £264,000 sounds enormous next to a £12,000 pension until you price what a guaranteed, index-linked £12,000 for life actually costs to buy.
• Letting the 3-month guarantee expire. The advice process takes time; if the window lapses, the recalculated CETV can be lower and some schemes charge for a second quote inside 12 months.
• Ignoring the tax consequences of what comes next. Money transferred into a personal pension is then subject to drawdown tax rules – 75% of withdrawals are taxable income at 20%/40%/45% in 2026/27, and large early withdrawals can push you into a higher band.
• Treating “must take advice” as a formality to route around. Firms that promise to rubber-stamp transfers are the classic red flag the FCA warns about; if the adviser says stay, that answer is the product you paid for.

Frequently asked questions

What is a CETV?

A Cash Equivalent Transfer Value is the lump sum your defined benefit scheme offers in exchange for giving up your guaranteed pension for life. It is calculated by the scheme actuary and you have a statutory right to one free CETV every 12 months. Once issued, a CETV is normally guaranteed for 3 months.

Why are transfer values lower than they were in 2021?

CETVs move inversely with gilt yields. When yields were at historic lows around 2021, multiples of 30 to 40 times the annual pension were common. Yields have risen sharply since 2022, so schemes need less money today to fund the same promise – typical multiples in 2026 sit around 20 to 25 times, though every scheme differs.

Do I legally need financial advice to transfer?

Yes, if your transfer value is more than £30,000. The law requires you to take advice from an FCA-regulated adviser with pension transfer specialist permissions before the scheme will pay out. Trustees must see evidence that advice was taken.

Is transferring a defined benefit pension a good idea?

For most people, no. The FCA's starting assumption is that a DB transfer is unlikely to be suitable, because you swap a guaranteed, inflation-linked income for life for an invested pot that can run out. Transfers occasionally suit people with serious ill health, no spouse, substantial other assets or a genuine need for flexibility – but that judgement is exactly what the compulsory advice is for.

How long is a CETV guaranteed for?

Once your scheme issues a written CETV it is normally guaranteed for 3 months. If you proceed inside that window you receive the quoted figure; after it expires the value is recalculated at current market conditions and can rise or fall.

Can I transfer out of any defined benefit scheme?

No. Transfers out of unfunded public sector schemes such as the NHS, Teachers' and Civil Service schemes to flexible pensions have been banned since April 2015. Funded schemes, including the Local Government Pension Scheme and most private sector schemes, generally do allow transfers for deferred members.

Sources: statutory advice requirement and transfer rules from GOV.UK – Transferring your pension; regulator guidance from the FCA – Transferring a defined benefit pension; free impartial guidance at MoneyHelper. Multiples quoted are market-level estimates, not scheme quotations.