Should I Transfer My Defined Benefit (Final Salary) Pension?

Defined benefit, also known as final salary, pensions are an attractive retirement plan that offers a guaranteed income for life, providing financial stability and security. This, and the fact that your employer makes contributions on your behalf, is why moving a defined benefit pension to another scheme might be viewed as risky.

However, it is important to remember that every individual’s situation is different, and there may be circumstances where a transfer could be beneficial. Here, we explore the intricacies of defined benefit pension transfers, examining how they work, the potential advantages and disadvantages, and providing comprehensive information to help you navigate this complex decision.

Why would you transfer your defined benefit pension?

Although for some this may seem like an unusual prospect, there are actually a number of reasons why people may seek a way out of the confines of a defined benefit pension.

You might want more control and flexibility over your investments, with the potential to grow them more, and in line with your preferences and circumstances. You may want an ethical or sustainable plan, for instance, or manage it yourself via a SIPP (self invested pension plan), or you may have received a terminal diagnosis and want a pension that can be inherited.

However, it is important to carefully evaluate the potential gains against the risks and consider factors such as your risk tolerance, financial goals, retirement needs, health and family commitments.

How much will you get if you transfer your defined benefit pension?

It really depends on how much your pension fund is worth – and depends on factors like scheme-specific calculations, your age, life expectancy, and existing interest rates. Always assess how much you’d receive and compare it to what you would get if you were to stay put. This involves looking at how your transferred funds could grow and the income they are expected to generate when you retire. To understand the potential impact on your retirement income, evaluate the outcomes carefully and seek professional advice. That way, you can make an informed decision that fits with your long-term hopes for the future.

When is is not a good idea to transfer your defined benefit pension?

It’s wise to be cautious when exploring your options. While a defined benefit pension transfer can offer advantages, there are circumstances where it may not be advisable. If you have health issues or a strong need for a guaranteed income throughout retirement, retaining stability and security is usually more suitable. Additionally, if the transfer value significantly differs from the projected amount, it may be worth reconsidering the decision.

What are the advantages and disadvantages of a defined benefit transfer?

Transferring your defined benefit pension involves weighing up the pros and cons for your individual circumstances. For some, the advantages will outweigh the drawbacks, while for many others the disadvantages mean that it isn’t the right decision to take. This is why tailored defined benefit pension advice with an expert in this area is a must before making any big decisions.


Benefits can include increased flexibility and control over your investments. You can tailor your retirement strategy to your own needs and goals. There are also opportunities for potentially higher growth so you enjoy a better quality of life in retirement and can share your earnings with your loved ones.


On the other hand, transferring means giving up a guaranteed income for life and taking on the responsibility of managing your own investments, which carries risks and could prove stressful. Other disadvantages of transferring out of your defined benefit/final salary include:

  • Uncertainty: The decision is irreversible, meaning you would be giving up valuable guaranteed pension benefits i.e. income for yourself or your spouse.
  • Inflation: This is a risk that is taken on without a guaranteed income
  • Investment Risk: If the scheme loses value due to low investment returns or high unsustainable withdrawls, your fund could reduce or run out.
  • Tax: DB pension schemes are treated favourably regarding pension tax relief.
  • Interest rates: These may be too low to make it worth your while transferring out.

You’ll notice here that there are more cons listed than pros, so it’s easy to see why we recommend caution and strongly advise that you seek professional consultation before taking action.

Do you have to take financial advice if you want to transfer your defined benefit pension?

Taking financial advice is highly recommended and, in many cases, a regulatory requirement for a final salary pension transfer. Seeking qualified advice from a specialist can provide you with valuable insights and expertise to navigate any complex decision about your financial future. An experienced advisor can assess your individual circumstances, help you understand the implications, and guide you in making an informed decision tailored to your needs and goals. In addition, professional advice can help to protect you from potential scams – it’s important to stay vigilant and be cautious of fraudulent schemes when considering your pension options.

What to do if you are unsure

If you’re still confused about the best thing to do, you’re not alone. Transferring your defined benefit pension is a significant financial decision that requires careful consideration. While the option can provide increased flexibility and control over investments, it is important to weigh the potential benefits against the risks and consider your individual circumstances and retirement objectives.

Retaining a defined benefit pension may be more suitable if you prioritise guaranteed income or have specific health considerations. The transfer value and the potential growth of transferred funds should also be calculated when making the decision.

Remember, when it comes to considering your financial future and that of your loved ones, any decision can become complex, and there is no one-size-fits-all answer. It is essential to gather all the necessary information, evaluate the pros and cons, and consult with a specialist who can provide personalised advice based on your individual needs and goals.

To find out more, book an appointment with one of our specialist pension advisors.

Transferring out of a Defined Benefit Scheme is unlikely to be in the best interests of or be suitable for most people.

The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.