DB Pension Transfers — Key Facts 2025
Since gilt yields rose sharply in 2022, DB pension transfer values (CETVs) have fallen significantly — often to 15-20x annual pension vs 30-40x seen in 2020-2021. Most financial advisers now recommend keeping DB pensions rather than transferring.
⚠️ FCA rule: You must receive regulated financial advice before transferring a DB pension worth over £30,000. Many advisers now decline to recommend transfers.
Frequently Asked Questions
What is a CETV?
A Cash Equivalent Transfer Value (CETV) is the lump sum your pension scheme offers you in exchange for giving up your defined benefit pension. It represents the present value of your future pension promise.
How is a CETV calculated?
Actuaries calculate the CETV by discounting future expected pension payments to today's value. Higher gilt yields reduce CETVs; lower yields increase them. Post-2022 CETVs are significantly lower than 2020-2021 values.
Do I need financial advice to transfer?
Yes — FCA rules require regulated financial advice for DB pension transfers over £30,000. The advice process typically costs £2,000-5,000 and must include a Transfer Value Analysis (TVAS).
Is it a good idea to transfer my DB pension?
Usually not. DB pensions provide guaranteed income for life, inflation protection, and spouse/dependant benefits. Most IFAs now recommend against transfers unless specific circumstances apply (terminal illness, no dependants, very large CETV).
Why have CETVs fallen since 2022?
CETVs are inversely related to gilt (government bond) yields. When yields rise (as happened sharply in 2022), the discount rate used to value future pension payments increases, reducing CETVs significantly.
What is the 'critical yield' in a transfer analysis?
The critical yield is the investment return needed to match the pension income if you transfer. FCA guidance suggests if the critical yield exceeds ~2%, the transfer is unlikely to be in your interest.
What happens to my DB pension if I die before retirement?
Most DB schemes pay a lump sum (typically 2-4x salary) and dependant's pension. If you transfer and die before drawing the fund, your beneficiaries inherit the pension pot per your nomination.
Can I transfer to a SIPP?
Yes — you can transfer a DB pension to a Self-Invested Personal Pension (SIPP) after receiving regulated advice. The SIPP gives investment flexibility and drawdown options at retirement.
What are enhanced transfer values (ETVs)?
Some employers offer enhanced transfers above the standard CETV to reduce their pension liability. EVTs can be 20-30% above the standard figure and may make transfer more attractive.
What if my employer's pension scheme is in deficit?
If the scheme has a deficit and the employer becomes insolvent, the Pension Protection Fund (PPF) takes over. PPF pays 100% for pensioners and 90% (up to the compensation cap) for deferred members.
Can I transfer a public sector pension?
Public sector unfunded pensions (NHS, teachers, police) cannot generally be transferred to a private arrangement. Local government pensions (LGPS) can be transferred.
What is a Pension Transfer Specialist?
An IFA with a specific FCA permission to advise on pension transfers (Pension Transfer Specialist, PTS qualification). Advisers without this qualification cannot give pension transfer advice.