What is a Cash Equivalent Transfer Value (CETV)?

A CETV is the amount your defined benefit pension scheme will pay to transfer your pension entitlement to another pension arrangement. It represents the present capital value of your future DB pension promise. Schemes are required to provide a CETV on request (with some conditions).

Is financial advice required before transferring a DB pension?

Yes. By law, if your defined benefit pension is worth more than £30,000, you must obtain regulated financial advice from a qualified adviser before transferring. This is a legal requirement, not just a recommendation. Advisers must have Pension Transfer Specialist (PTS) qualifications.

What is a transfer value multiple?

The transfer value multiple is the CETV divided by your annual pension income. For example, a £400,000 CETV for a £20,000/year pension gives a multiple of 20x. Higher multiples suggest the CETV is more generous relative to the income you give up. Multiples over 25x are generally considered potentially worth considering.

What is a good transfer value multiple?

There is no universal answer. Historically, transfer multiples above 25x are often considered potentially favourable given that a 25x multiple means you would need 25 years of pension income to equal the CETV. Multiples below 20x are rarely considered worth transferring. However, the comparison must account for guaranteed inflation increases, spouse's pension, and longevity.

What are the risks of transferring a DB pension?

Key risks include: investment risk (your DC pot can fall in value), longevity risk (you may outlive the pot), inflation risk (DB pensions typically increase annually; DC does not guarantee this), and losing valuable scheme benefits such as death-in-service lump sum and spouse's pension.

Can I transfer a public sector pension?

Most public sector pensions (NHS, teachers, civil service, police, armed forces) cannot be transferred to a DC arrangement. They are unfunded schemes backed by the government and the government has restricted transfers out. Some local government schemes may allow transfers but this is scheme-specific.

What happens to my DB pension if the company goes bust?

Private sector DB pensions are protected by the Pension Protection Fund (PPF). If your employer becomes insolvent, the PPF typically pays 100% of pension for those already receiving it and 90% (subject to a compensation cap) for deferred members. This protection disappears if you transfer out.

What are the tax implications of transferring a DB pension?

The transfer itself is not a taxable event. The tax treatment of income from the DC pension after transfer is similar to any pension — 25% tax-free cash entitlement (up to £268,275 lifetime limit) and the rest taxed as income. However, some DB schemes include enhanced tax-free cash or other protected benefits that would be lost on transfer.

Can I transfer my DB pension after retirement?

No. Once you have started drawing a defined benefit pension, you cannot transfer the remaining entitlement. CETVs are only available to deferred members who have not yet started taking their pension income.

How is the CETV calculated by the pension scheme?

Schemes use actuarial assumptions including life expectancy, discount rates, and inflation expectations. The assumptions used vary between schemes and change over time. When interest rates rise, CETVs typically fall because future pension income is discounted more heavily. This is why DB CETVs fell significantly in 2022-23.

What is a pension transfer specialist (PTS)?

A PTS is a financial adviser with specialist qualifications (specifically the G60 or AF3 qualification) who is authorised by the FCA to advise on defined benefit pension transfers. Only a PTS can provide the legally required advice for DB transfers over £30,000.

What is the 4% rule in the context of DB transfer income?

In this context, applying a 4% withdrawal rate to the CETV estimates the sustainable annual income you might draw from a DC pot derived from the transfer. For example, a £400,000 CETV generating 4% gives £16,000 per year. This can be compared to the DB pension income foregone.

Should I accept the transfer value offered?

This is a highly individual decision. The FCA and most financial advisers note that for most people, remaining in a DB pension is likely to be in their best interests. Transfers may be suitable in specific circumstances such as serious ill health, no dependants, or very generous CETVs. Always take regulated advice specific to your situation.

What happens to the CETV if I delay transferring?

CETVs are valid for three months after they are issued. After that, you need to request a new one. Rates change as interest rates and actuarial assumptions change. There is no guarantee a new CETV will be higher or lower than a previous one — it depends entirely on prevailing conditions.

Can I transfer to a SIPP?

Yes. A Self-Invested Personal Pension (SIPP) is a common destination for DB pension transfers. SIPPs offer a wide investment choice and flexibility. You must still receive regulated financial advice before transferring if the DB pension is worth more than £30,000.

How long does a DB pension transfer take?

DB transfers typically take 3 to 6 months from the decision to transfer, including the regulated advice process, completing scheme paperwork, and the scheme processing the transfer. Some schemes with backlogs can take longer. The CETV must be current when the transfer completes.

What is a safeguarded benefit?

Safeguarded benefits are pension rights with a guaranteed element, including defined benefit pensions and guaranteed annuity rates. The FCA requires regulated advice before transferring safeguarded benefits worth more than £30,000 to prevent unsuitable transfers driven by short-term incentives.

What is pension liberation fraud?

Pension liberation fraud involves unlawful schemes that promise early access to pension funds before age 55 (or 57 from 2028). Legitimate pension transfers do not allow early access in this way. If you are approached with an offer of early access, this is almost certainly a scam. Report it to Action Fraud and the FCA.

Do I lose all inflation protection if I transfer?

Yes, typically. DB pensions are required by law to increase in payment by a minimum amount each year (LPI — Limited Price Indexation). When you transfer to a DC arrangement, your income depends on investment returns and your withdrawal strategy, not statutory increases. Inflation protection must be replicated explicitly through investment strategy.

What is a bridging pension and how does it affect transfer value?

A bridging pension is a temporary higher pension paid by some DB schemes until you reach State Pension age, after which the pension reduces because the State Pension tops up the income. If your DB scheme includes a bridging pension, the transfer value will reflect this temporary benefit, and you should understand how it works before transferring.

Are there charges on a DB pension transfer?

The scheme itself does not usually charge for the transfer (other than potentially a fee to provide a CETV if requested multiple times). However, financial advice costs can be significant — typically £2,000 to £5,000 or more for advice on whether to transfer. Some advisers also charge ongoing fees to manage the DC pot.

What is the Pension Transfer Gold Standard?

The Pension Transfer Gold Standard is a voluntary commitment by advisory firms to follow good practice in DB pension transfer advice, including always starting from the assumption that the DB pension is likely to be better value. Firms signed up to the Gold Standard commit to clear initial disclosures and consumer-friendly processes.

Can I transfer a defined benefit pension to a defined benefit scheme?

Yes. It is possible to transfer between defined benefit schemes, for example if you change employers. The new scheme will have its own transfer rules. This type of transfer is different from a DB to DC transfer and has different regulatory requirements and considerations.

What is a critical yield?

The critical yield is the annual investment return that the DC pot derived from a CETV must achieve to match the income you would have received from the DB pension. If the critical yield is very high (e.g. 8% per year) this indicates the transfer is unlikely to be beneficial for most investors, because achieving that return consistently is difficult and risky.

What are the FCA rules on DB pension transfer advice?

The FCA requires advisers to assess whether a transfer is in the client's best interests by comparing the transfer value against the cost of replacing the DB benefits. Advisers must document their analysis using a Transfer Value Comparator (TVC). The FCA's default position is that DB pensions are valuable and transfers are unlikely to be suitable for most people.

What is a deferred pension?

A deferred pension (or deferred member) refers to a pension in a scheme where you have stopped contributing — because you left that employer — but have not yet started receiving the pension. The scheme preserves your accrued entitlement until retirement age. It is from deferred DB pensions that CETVs are most commonly requested.

What percentage of DB pension transfers are recommended by advisers?

Regulated financial advisers recommend against DB pension transfers for the majority of clients. FCA data suggests that most advisers advise against transfers in the majority of cases. Transfers are recommended only when specific individual circumstances make the CETV and flexibility clearly superior for that client.

Can a defined benefit transfer be reversed?

No. Once a defined benefit pension has been transferred to a DC arrangement, the transfer is permanent and cannot be reversed. This irreversible nature is one of the most important reasons why regulated advice is legally required and why most advisers caution against transfers unless circumstances clearly support it.

What is a section 32 buyout policy?

A section 32 policy (also called a buyout bond) is a type of insurance contract that was historically used to receive DB pension transfers. They often contain guaranteed annuity rates (GARs) which are valuable but may be lost if the policy is transferred again. Check carefully before transferring a section 32 policy.

What is the difference between a CETV and the actuarial present value of my DB pension?

The actuarial present value is the theoretical cost of replicating your DB pension's guaranteed income, inflation protection, and spousal benefits using annuity rates. The CETV may be less than this actuarial value — especially in low interest rate environments. When comparing, a Transfer Value Comparator (TVC) illustrates how much it would cost to buy equivalent benefits in the market.

What is the Pension Protection Fund (PPF) cap?

The PPF cap limits the compensation paid to deferred DB pension members whose scheme enters the PPF. In 2025/26 the cap is approximately £41,461 per year at age 65 (90% of £46,068). Higher earners with large DB pensions may receive less than their full entitlement if the scheme enters the PPF, which is a risk worth understanding.

What does DB to DC transfer mean for inheritance tax planning?

Defined contribution pension pots (post-transfer) are outside your estate for inheritance tax purposes. They can be passed to beneficiaries free of IHT (though income tax may apply on withdrawal). A DB pension also has death benefits but these are typically limited to a spouse's pension or lump sum — not the full pot value. This IHT efficiency is one reason some advisers cite in favour of transfers.

What is the Money Helper guidance on DB transfers?

Money Helper (the government-backed guidance service, formerly the Money Advice Service) provides free, impartial guidance on DB pension transfers. Their guidance consistently emphasises that most people are likely to be better off keeping their DB pension, and strongly encourages seeking regulated financial advice before transferring.

Is there a cooling-off period after a DB transfer?

There is no cooling-off period once a defined benefit pension transfer has been completed. This is why the regulated advice requirement and the careful consideration of CETVs is so important — the decision is permanent. Some providers may offer a cancellation period before the transfer is finalised.

How does the transfer affect my Lifetime Allowance (LTA) position?

The Lifetime Allowance was abolished from 6 April 2024. Previously, transferring a DB pension could affect LTA calculations. From 2024/25 onwards, the focus is on the Lump Sum Allowance (£268,275) and the Lump Sum and Death Benefit Allowance (£1,073,100), which replace the old LTA framework for tax-free cash calculations.

What records should I keep when considering a DB transfer?

Keep copies of the CETV letter, the suitability report from your adviser, all scheme documents showing your DB entitlement, and any correspondence with the scheme. These records are important if you need to make a complaint or if there are disputes about the advice received.

What is the Transfer Value Comparator (TVC)?

The Transfer Value Comparator (TVC) is a document that regulated advisers must provide when advising on DB transfers. It shows the estimated cost of buying equivalent guaranteed benefits in the open market using the CETV, helping clients understand whether the CETV offers fair value. If the CETV is less than the cost of replacing the benefits, the TVC will show this clearly.

How does enhanced protection affect a DB transfer?

Enhanced protection is a form of LTA protection that some individuals registered before 2012. DB pension transfers can sometimes affect or void enhanced protection. With the abolition of the LTA from April 2024, the impact has changed significantly. Seek specific advice if you have any form of LTA protection registered prior to 2024.

What fees do pension transfer advisers charge?

Pension transfer advice fees vary widely. Initial advice fees typically range from £2,000 to £5,000 or more for large transfers, sometimes charged as a percentage of the CETV (e.g. 2-3%). Ongoing advice and portfolio management charges are separate and typically 0.5-1% per year. The advice cost should be clearly disclosed in the adviser's fees document.

What is a pension scam and how do I avoid them when considering a transfer?

Pension scams often involve cold calls, unsolicited offers of pension reviews, or promises of higher returns or early access. Always check that your adviser is FCA-registered at register.fca.org.uk. Never transfer to a pension scheme you haven't fully verified. If in doubt, call the FCA helpline 0800 111 6768.

How does inflation indexation of DB pensions work?

DB pensions in payment must increase by at least Limited Price Indexation (LPI) — typically CPI up to 2.5% or 5% depending on when benefits accrued. Some schemes offer RPI-linked or discretionary increases. This guaranteed inflation protection is extremely valuable and one of the main reasons most advisers recommend keeping DB pensions unless circumstances are exceptional.

What is the impact of divorce on a DB CETV?

Pension sharing orders in divorce can split a DB pension. A CETV for pension sharing purposes is calculated differently from a transfer CETV. After a pension sharing order, the ex-spouse receives a pension credit, which can either remain in the original scheme (if allowed) or be transferred to their own arrangement. Financial advice and a solicitor are both needed in this situation.

Can I have a DB pension and also make DC contributions?

Yes. There is no rule preventing you from contributing to a DC pension (such as a workplace auto-enrolment scheme or SIPP) whilst also building up DB benefits in another scheme. The Annual Allowance of £60,000 (2025/26) covers both DB pension input and DC contributions combined. Active DB membership does not trigger the MPAA.

What happens if I die before taking my DB pension?

Death-in-service benefits from a DB scheme typically pay a lump sum (often 3-4 times salary or a refund of contributions) and a survivor's pension to a spouse or dependent. Deferred DB members (those who have left the employer but not yet drawn the pension) may receive a smaller death benefit. Benefits vary significantly between schemes — check your scheme rules.

Is a DB transfer suitable for someone in poor health?

Poor health is one of the circumstances where a DB transfer might sometimes be considered more favourably — because the longevity risk is lower (you may not live long enough to benefit from the guaranteed lifetime income). An enhanced annuity (which pays more to those in poor health) may also be an alternative. Regulated advice is still required and specific health circumstances must be properly assessed.

What is a partial transfer from a DB scheme?

Some DB schemes allow partial transfers — transferring part of your DB entitlement to a DC arrangement while keeping the rest in the DB scheme. This option is not universally available and schemes are not required to offer it. Where available, it can provide a balance of guaranteed income and flexible capital, which some people find attractive.

How do I find my DB pension CETV?

Contact your pension scheme administrator or former employer's HR department to request a CETV quotation. You are entitled to one free CETV per year. The scheme must provide it within 3 months of your request. Subsequent requests within a year may be declined or charged for.

What is the 2028 pension access age change and how does it affect transfer decisions?

From 6 April 2028, the minimum pension access age in the UK rises from 55 to 57. This applies to DC pensions. DB scheme normal retirement ages are set by the scheme rules and may differ. If you are considering a transfer, accessing your DC pot before 2028 (if you are under 57) requires careful timing and may need planning.

Can I transfer a pension I have already started drawing?

No. Once you have commenced drawing a defined benefit pension (i.e. you are in receipt of payments), you cannot transfer the entitlement. CETVs are only available to deferred members who have not yet started taking their pension. Similarly, an annuity already purchased cannot be transferred or reversed.

What is the difference between normal retirement date and state pension age for DB schemes?

A DB scheme's normal retirement date (NRD) is specified in the scheme rules — commonly 60 or 65, though many modern schemes use 65 or 67. The State Pension age is a separate government-determined age (currently 66, rising to 67 by 2028). Taking a DB pension before the NRD usually reduces benefits actuarially. The two dates are entirely independent.

Can I delay taking my DB pension past normal retirement date?

Most DB schemes allow you to defer taking your pension past the normal retirement date, which increases the annual pension when you do draw it. The increase amount depends on the scheme's actuarial factors. Delaying can be valuable if you are still working and do not need the income yet.

Final Salary Pension Transfer Value Calculator 2025/26

Compare your Cash Equivalent Transfer Value (CETV) against keeping your defined benefit pension. See the transfer multiple, projected incomes, and break-even analysis.

DB to DC Transfer Analysis

⚠ Legal Requirement: If your DB pension is worth more than £30,000, you must receive regulated financial advice from a qualified Pension Transfer Specialist before transferring. This is a legal obligation, not optional.

Annual DB pension income at retirement £

Current age

Normal retirement age

CETV offered by scheme £

Expected investment return if transferred % p.a.

State Pension entitlement

Understanding Your DB Pension Transfer

A defined benefit (final salary or career average) pension provides a guaranteed income for life, typically linked to your salary and years of service. The Cash Equivalent Transfer Value (CETV) is the lump sum your scheme will pay to transfer this entitlement to a defined contribution (DC) arrangement.

The Transfer Value Multiple

The most common initial assessment is the transfer value multiple — how many times the annual pension income the CETV represents. A CETV of £400,000 for a £20,000/year pension gives a multiple of 20x. As a general rule of thumb: multiples above 25x are sometimes considered worth exploring further; multiples below 20x are rarely financially superior to keeping the DB pension. However, this is a simplification — the full analysis must consider inflation increases, spousal benefits, and personal circumstances.

Why Most People Keep Their DB Pension

The FCA position, supported by most regulated advisers, is that the majority of people are likely to be better off keeping their DB pension. The guaranteed, inflation-linked income for life, backed by the Pension Protection Fund (for private sector schemes), provides valuable security that is difficult and expensive to replicate through a DC pot. Transfers should only be considered after thorough professional advice.

When Transfer May Be Worth Considering

Circumstances where regulated advisers sometimes recommend considering a transfer include: very generous CETV (high multiple), serious ill health reducing life expectancy, no financial dependants, desire for IHT planning, or specific cashflow needs. Even in these cases, regulated advice is legally required before proceeding.