FINAL SALARY PENSION TRANSFER ADVICE & GUIDE

Final Salary Pension Transfer Advice from a Leading UK Specialist

FCA Regulated PFS Specialist Accreditations

If you’re considering cashing in your Final Salary Pension and your pension value is worth more than £30,000 you’ll need to speak to a Final Salary Pension Transfer Specialist

A Final Salary Pension Transfer Specialist is an expert in this area and can give you advice on whether to take a Final Salary Pension Lump Sum and help you decide whether a pension transfer is really in your best interests. The truth is for most people, it’s not.

Most people seeking Final salary pension lump sum advice may have already made up their minds, but it’s important not to make a decision until you have all of the information available to you.

Cashing in a final salary pension might seem tempting, especially with soaring pension transfer values, but it’s important not to get over excited by the £££ signs as the wrong decision could severely impact your financial wellbeing for the rest of your life.

This helpful article has been designed to guide and inform you to make the right decision for you.

Final Salary Pension Transfer Specialist

Final Salary Pension transfers are a highly specialist area and transfers of this nature are considered high-risk. Transfer values have soared in recent years, providing a catalyst for many to seek a transfer out of their Defined Benefit scheme but It’s incredibly important to seek expert final salary pension transfer advice before you do anything.

Our Final Salary Pension Transfer Specialist can help you…

  • Understand the true value of your Defined Benefit pension 
  • Explain investment risk and how that specifically could impact your circumstances
  • Help you build a plan to achieve your lifestyle & retirement goals
  • Build a solid investment strategy – post transfer or
  • Show you alternative routes of action

 In addition, look out for the Pension Gold Standard mark, designed to make sure people receive ethical and professional advice for Final Salary Pension Transfers.

Simon Garber Dip PFS Pension transfer specialist
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Final Salary Pension Transfer Advice

Whilst you’re reading this article (and any other article online), it’s important to understand that this is generic information provided as a guide. Final Salary Pension Transfer Advice should be based on your personal circumstances and individual goals.

For most people transferring out of a Final Salary Scheme is not in their best interest.

Our transfer advice process follows the Pension Gold Standard principles to ensure that you get quality advice that is appropriate to you. We focus on your goals from the beginning and build a plan based on what’s important to you

It is important to understand that this is not just a box-ticking exercise, our Final Salary Pension Transfer Specialist will need to carry out in-depth financial analysis and risk profiling and will need to provide a personal recommendation in order for you to transfer your pension.

This means we have to be confident that the specialist final salary pension transfer advice we are giving will enable you to meet your goals and not expose you to inappropriate risk – if we don’t think it’s in your best interest to do so, we’ll tell you.

We also focus heavily on designing a suitable investment strategy for your money once it’s transferred. Even the most seasoned investors usually lack the experience to invest a Final salary pension lump sum, it’s a complex investment that must be managed to ensure you can meet both your short and long-term financial goals.

Final Salary Pension & Early Retirement Advice

Whilst Final Salary Pensions offer a guaranteed income for life, one of the drawbacks is their inflexibility when it comes to accessing your pension. Final Salary pensions cannot usually be accessed until your pension scheme’s retirement age.

Some Final Salary Pension schemes may offer a protected early retirement age, but many do not.

Most Final Salary Schemes will allow early retirement, but the way in which your early retirement benefits are calculated can result in you receiving far less than you’d anticipated. 

It’s important to seek financial advice, even if you don’t want to transfer your pension. You don’t want to give up valuable benefits unknowingly.

If you’re serious about early retirement, request an early retirement estimate from your pension scheme and then speak to an expert.

If you’ve received a less-than-generous early retirement calculation, then it might be worth exploring a transfer of a final salary pension to a SIPP or other defined contribution arrangement. Since Defined Contribution pensions allow you to flexible access your money (including 25% tax-free cash) from 55.

Of course, wanting to retire early on it’s own is not enough of a reason to transfer your pension. Remember that Defined Benefit pensions are guaranteed for life and adjusted for inflation – their value should not be underestimated.

Cashing in a Final Salary Pension

If you’re considering cashing in a Final Salary pension there are a number of things you need to consider. Firstly, if it’s even possible.

If your Final Salary Pension is part of an unfunded scheme e.g. NHS, Police, Army, Fire Service, Teachers etc or if your scheme is in financial difficulties, it may not be possible to cash your pension in.

If you are able to cash in your pension, there are a number of factors that affect whether or not it might be suitable for you to transfer your final salary pension including (but not limited to):

1) Your attitude to risk
2) Your aptitude for risk (i.e. can you cope if your pension value goes down)
3) Your age
4) Your short & long-term goals
5) Your investment experience
6) The value of other assets/pension/wealth you hold

If you are adverse to risk or if you are reliant on the income provided by your final salary pension, it’s not going to be in your best interests to transfer out. 

Final Salary Pension in a Divorce Settlement

If you have a Final Salary Pension and you’re getting divorced, it is possible to share part of  your pension with your ex whilst you remain a member of the scheme.

For Defined Benefit schemes where a transfer is not possible, your ex can be made part of the scheme and receive the awarded proportion of your pension entirely separately from yours. Of course all of this needs to be agreed by a solicitor and signed off by a court as part of a financial settlement. 

Of course, if you choose to split your assets differently, you may wish to access your pension more flexibly, for instance to buy a property. In which case you may consider whether a pension transfer could be for you.

Regardless of whether you have a defined benefit pension or have transferred to a defined contribution arrangement, you won’t normally be able to access your cash before you are 55. 

Final Salary Pension: Cash Equivalent Transfer Value (CETV)

Your Cash Equivalent Transfer Value (CETV) is the amount you’ll get if you transfer out of your Final Salary Scheme. It’s not the same as your Pension Fund amount. 

A Final Salary Pension Transfer Cash Equivalent Transfer Value is the amount offered in exchange for you giving up your entitlement to an adjusted for inflation and guaranteed-for-life pension

The amount you’re offered should be a fair representation of the value of the benefits you are giving up. In reality, it’s almost always impossible to provide a like for like match of benefits from a Final Salary Pension in a defined contribution environment.

Your cash equivalent transfer value is decided by your pension scheme administrators and when deciding on a figure they’ll consider Factors such as 

1) Your Age
2) Scheme Retirement Age
3) Cost of Living
4) Life Expectancy of the average scheme member
5) Scheme investment costs & returns

Your Cash Equivalent Transfer Value can change and it may go up or down over time. You can read more about why transfer values change here.

Try Our CETV Calculator

If you’re considering a Final Salary Pension Transfer, you will need to know what your Cash Equivalent Transfer Value (CETV) is. Use our simple calculator to work out how much you might be offered.

CETV CALCULATOR
CETV calculator link

Final Salary Pension Transfer Pros & Cons

Despite the fact that most people would be worse off financially to give up a guaranteed income for life, especially one that’s protected against inflation, so many still do. But why? What are the pros of transferring your Final Salary Pension?

1. Enjoy flexible access to your money, from age 55

From 55, holders of personal pensions can flexibly access their pension, choose how much to take out and when. Personal pension holders also have access to 25% tax-free cash from 55, which is a tempting proposition for many.

2. Consider Early Retirement

Because of the flexibility to access tax-free cash and your personal pension from 55, many more people have been able to consider early retirement or semi-retirement

3. Leave a Tax-Free Inheritance

Before the 2014/15 pensions reforms, the ability to pass on wealth efficiently via a pension fund was limited. 

Now, owners of personal pensions can nominate anyone to receive the remaining value in their pension after they die. 

This ‘death benefit’ is usually paid as a lump sum to the beneficiary and is free from Inheritance Tax (if you die before the age of 75 and they take the money within 2 years – full details can be found here). Or find out what happens to your final salary pension when you die

4. Have more control over your income tax planning

Both Final salary pensions and personal pensions can provide income for your retirement.

With a final salary pension the level of pension income you can enjoy, and any tax-free lump sum payment to you will be decided by the Pension Scheme Administrator. 

With a personal pension, you can enjoy whatever income level you decide until it runs out.

If you opt to take your pension through flexi-access drawdown you can increase, decrease or even stop taking your pension income, as you please. 

If you don’t need extra income, you can leave the money in your pension pot and save on income tax.

Since it is now possible to pass on wealth via a personal pension without incurring inheritance tax, you may also choose to reduce Inheritance Tax liability on your estate by bequeathing money in your pension rather than cash or properties.

If your situation changes you can choose to withdraw their pension at a later stage.

This level of flexibility and control means that, as a personal pension holder, you can manage your tax liabilities more efficiently  and have more control over the rate at which you pay tax. 

If you’re managing multiple sources of income, this flexibility can be extremely useful.

5. Withdraw a tax-free lump sum

With a personal pension, you can withdraw up to 25% of your pension as a tax-free lump sum from age 55. 

You don’t need to take it all at once –  You could opt to receive it in instalments, which means you could retain a larger sum within your personal pension (which could also be passed on to loved ones free from Inheritance Tax in the event of your death). 

Whilst most final salary schemes also allow pension holders the option to take a one-off tax-free lump sum, it’s often offered at the cost of receiving a smaller starting pension. 

Sometimes, this lump sum is automatically offered in addition to your guaranteed pension income. But it’s important to note that the calculation method used to determine how much you would receive often results in you receiving less than 25%. So check first and make sure you understand because once you have selected your choice of pension benefits, you will not be able to change your mind in later years.

6. Control your investments

In a defined benefit pension arrangement, there’s no investment risk – your money is guaranteed and adjusted for inflation and your pension scheme administrators control how the money in the pension scheme is invested. 

If your pension is held in a Self-Invested Personal Pension you have complete control over how your money is invested and withdrawn. You can opt for a higher risk portfolio which may offer the chance for potentially higher returns (and losses) or choose to invest in different sectors

7. Avoid Pension Scheme Deficits

Whilst this should never be the sole reason to consider a transfer, it’s undoubtable that concerns over the future of a pension scheme play a part in some people’s decision making process. 

It was certainly the case in the British Steel debacle that saw hundreds of protected pensions moved out of the scheme unnecessarily 

It’s important to remember that most defined benefit pension are covered by the pension protection fund in the event that the scheme goes bust. Members will receive 90 per cent of  the value of their scheme pension (on the insolvency date).

Should I Transfer My Final Salary Pension?

Final Salary Pension Transfer is not right for everyone, it carries risk and requires careful planning and ongoing management. For most it’s ill-advised. But for a select few individuals, Final Salary Pension Transfer may be the best course of action for them to meet their financial and lifestyle goals.

If you’re wondering whether you should transfer your Final Salary Pension, there are a number of criteria you should consider carefully before making the decision to transfer

1) Attitude to risk
2) Aptitude for risk (i.e. can you cope if your pension value goes down)
3) Age
4) Financial Situation
5) Short & long-term goals
6) Investment experience
7) Value of other assets/pension/wealth you hold
8) Future plans to manage your money

Is a Pension Transfer Right for Me?

Moving a Final Salary Pension, you go from an investment that is guaranteed for life and protected against inflation to one that is subject to all of the risks of a standard investment. 

Attitude for risk

Your attitude towards risk is important here, if you’re not comfortable with the thought that the value of your money can go down, a transfer is not for you. 

Long-term financial investment is not for the faint of heart, you must be comfortable taking the highs with the lows.

Aptitude for risk

Similarly, and arguably more important is your aptitude to risk – even if ‘theoretically’ you are comfortable with risk – are you able to absorb short-term losses without it impacting on your lifestyle? Or your mental wellbeing?

If short-term market fluctuations are going to leave you with sleepless nights, a pension transfer is most certainly not for you.

Age

The further away from retirement you are, the less certainty you generally have about the type of retirement lifestyle you want to enjoy or your financial needs in retirement. As you get closer to retirement you generally have more clarity and it’s easier to plan.

A pension transfer is irrevocable. Since your pension is protected (and still guaranteed within the scheme) it makes sense to leave it where it is until you have a crystal clear plan (and an extremely valid reason) for moving it.

Research also suggests that the closer you are to your scheme retirement age, the higher the transfer value you’ll be offered – although again, this isn’t guaranteed.

Financial Situation

Getting your hands on a large pot of money can be very tempting, especially when you can access 25% of it as a tax-free lump sum at 55. But you must take into account your financial situation. 

Simon Garber, our final salary pension transfer specialist says:

“Most people have no need to move their pension. We’ve seen people with large savings pots and ISAs claim to need their tax-free cash but when pressed as to why they have no plans for it. Equally, I’ve seen people with no savings, in a precarious financial situation desperate to get their hands on their Final Salary Pension pot. These are the very people who desperately need the safety and security of a guaranteed income for life.”

Where Final Salary Pension Transfers do make sense is where people have multiple income sources in retirement and aren’t reliant on the income from the pension they want to transfer. Often the transfer will allow them to retire early or pass money onto adult children or family that they otherwise wouldn’t have been able to do.

Short and long-term goals

As we’ve explained, your pension transfer needs to align with both your long-term and short-term goals. For most customers we speak to, this is early retirement and also covers leaving a legacy .

Early retirement

Final Salary Schemes normally have a fixed retirement age, so if you’re planning on retiring early this might throw a spanner in the works. It might be possible to retire early  from your scheme but you’ll need to check whether there are penalties for doing so. You will normally have to sacrifice a certain amount for every year you are below the fixed retirement age.

You’ll also need permission from the Pension Trustees/your employer to retire early.

Leaving a legacy

Final Salary Schemes are pretty inflexible when it comes to passing on wealth.

Changes to Inheritance tax rules in October 2014 brought greater flexibility over who can inherit your pension. Private Pensions in drawdown can now be left as a legacy to any beneficiary that you nominate. But these rules don’t apply to Final Salary Pension members.

Inheritance rules for a Final Salary Pension differ from scheme to scheme but generally, they will pay a reduced guaranteed, inflation-protected survivor’s pension of between half to two-thirds to your spouse or dependent child when you die. Exactly how much they’ll get, depends on when you die and the scheme you’re in. If you’re single and without dependent children, any pension that you have built up gets absorbed back into the scheme pension pot when you die.

Investment Experience

Since the arrival of pension drawdown there has been a worrying pattern emerging of inexperienced investors taking charge of their own pensions.

For most people, their pension is the most valuable asset they have. In most cases the value of your private pension is worth more than the equity in your home. 

And yet despite this and coupled with the fact that as a nation we have zero financial and investment education in schools, a growing number of individuals are opting to self manage their money leaving them wide open to common (and extremely costly) investor mistakes.

Future plans to manage your money

Managing your pension through retirement is not the same as investing an ISA, there are a lot more moving parts and things to consider. 

Most people who plan to move their final salary pension plan to manage their investments themselves, which is almost always a catastrophic decision for their future wealth. Research by Zurich estimates that 41% of self investors could run out of money in retirement, through mismanaging their pension.

Pension investments require a long-term investment strategy with a high level of diversification. Most individuals do not have the investment experience and skills needed to grow their money at the rate needed to sustain their money through retirement 

Should I Cash in My Final Salary Pension?

If you’re wondering if it’s a good idea to cash in your final salary pension then you need to look at your reasoning and motivation behind the move. 

Ask yourself the following questions:

1) Is there a genuine reason for moving my pension?
2) Will moving my pension allow me to achieve a goal that I couldn’t have achieved otherwise?
3) Would I be able to cope financially without the guaranteed income?
4) Do I understand the true value of the asset and benefits I am giving up, including the future value?
5) Am I comfortable knowing that the value of my pension could fall?
6) Do I have a spouse who would need a guaranteed income if I were to die early?
7) Am I confident I have access to the right investment and pension advice?
8) Do I have a plan to manage my money in a personal pension arrangement that protects the value of my pension and ensures I’ll have an income for life.

It’s important to take a holistic view of your situation before you consider cashing in your pension. It’s easy to let a high transfer value distract you from the difficult questions that need to be answered. 

Often people will come to us and their sole rationale for moving their pension is that they want their spouse to get their entire pension if they die. In this instance we would always recommend Life Insurance as an alternative first. This provides their spouse with an income equal to the full value of the pension whilst preserving the guaranteed income.

It’s always important to explore whether an alternative course of action could help you achieve your goals first, without you needing to give up your valuable guaranteed income.

So, is it ever a good idea to cash in my Final Salary Pension?

It might seem like there’s never a good reason for transferring your Pension, which isn’t quite true. Sometimes it is worth taking a final salary pension lump sum because 

a) it makes sense for you to do so given your unique circumstances
b) be the only course of action that allows you to meet your retirement goals

What Age Can I Transfer My Final Salary Pension?

In theory you can transfer your pension at any age, but the younger you are, the less clarity you might have about your retirement plans and needs and the more risk is involved. As a result you may be advised to wait until you are closer to retirement age before you consider whether a transfer is really in your best interests.

A joint research paper by Royal London and LCP showed that Transfer Values as a percentage of Transfer Value Comparator scores went up the closer members were to the scheme retirement age – which basically means the closer you are to retirement, the closer your transfer value is to the true value of your pension pot. 

If you opt to transfer your pension when you’re 10 years away from the scheme retirement age, you’ll be offered far less. The reason being,  scheme administrators will factor in that you have 10 years to invest your cash to make up the difference. Depending on your investment strategy and market returns, this could work to your benefit or your detriment.

Concerns over inappropriate advice from rogue advisers has also prompted changes to the industry, including insurers who have added additional stipulations as to the type of transfers they will cover. As a result, few financial advisers will provide a positive recommendation for transfers under the age of 50.

Can I Take My Final Salary Pension at 55?

The rules around whether you can take your Final Salary pension at 55 will be different for each scheme so you’ll need to check with your pension scheme provider first.

All final salary pension schemes have a fixed retirement age at which they will pay out but the specific age is different for each scheme. Some schemes have a protected early retirement age below 55, but most are around the 60-65 mark.

If your scheme retirement age isn’t set at 55 you’ll need to look into your options for early retirement.

Whilst some DB pension schemes allow members to take early retirement, it normally comes with stipulations:

1) Firstly,  You’ll need to apply for early retirement
2) Your estimated pension income will be discounted for the fact you are retiring early
3) If you’re eligible for a cash lump sum, that will also be discounted.

Your scheme rules will depict how much your pension might be discounted by in order to reflect your early retirement. It’s important to take proper financial advice, because once you opt for early retirement, your income will be fixed at that level. 

Unlike defined contribution pensions where you can access 25% of your cash as a tax-free lump sum from age 55. Final Salary pensions, normally only give you the option to take a tax-free lump sum at the same time as you take your pension. 

Because of the way Final Salary Pensions work, you don’t have a specific pot of money to take 25% from, so your scheme administrators will calculate how much you’ll get based on their own workings.  What you are offered may not be equal to the 25% you might receive if your pension was in a defined contribution arrangement.

Early retirement is calculated differently for each pension scheme, so it’s important to contact your scheme administrator to find out what rules apply to you. More importantly, you should seek expert guidance to see if it’s in your best interests.

How Much is My Final Salary Pension Worth?

Your pension transfer value and what your pension is “worth” are two different things. On paper, your pension may be “worth” far more than the cash equivalent transfer value being offered to you.

A final salary pension offers you…

a) A guaranteed income for life
b) Inflation-proofed income
c) Spousal death benefits

A guaranteed, predictable income for life, obviously increases in value the longer you live, but hindsight is a wonderful thing. None of us knows how long we’re going to live.

Of course, Final Salary Pensions also offer peace of mind with virtually risk-free retirement income, no investment cost and a pension scheme that manages the investment of your pension pot for you. 

For some individuals, risk-free income and complete peace of mind are invaluable and worth more than any transfer value could ever be.

As a straight like-for-like market comparison, it’s almost impossible to completely match the benefits of a Final Salary Pension in a defined contribution environment. In order to provide a risk-free guaranteed income for life, you’d need to buy an annuity and they’re extremely expensive.

That said, there are those who value freedom and flexibility far more greatly than guarantees and predictability, for instance, those who want to:

1) Retire early
2) Leave money to somebody other than a spouse
3) Take their 25% tax-free cash at 55
4) Flexibly-access their money
5) Manage their tax-liability
6) Invest their own money

This is why our transfer advice is more focussed on your goals and aspirations than the size of the transfer value you are being offered.

How Do You Calculate Your Final Salary Pension Value?

Your pension transfer value or Cash Equivalent Transfer Value (CETV) should provide a fair representation of the value of benefits you are giving up by transferring out. Some schemes are more generous than others in working out the value of these benefits to you.

It’s not possible to calculate your pension transfer value yourself. You will normally need to request a Cash Equivalent Transfer Value directly from your scheme trustees. However, it is possible to get a general idea of how much your pension transfer might be worth by using a CETV calculator online. 

If you request a CETV from your scheme, It’s important that you also ask them for details of other protected benefits that your scheme provides.

There are several Final Salary Pension Transfer Value Calculators that you can use to estimate how much your transfer value might be worth, but they are based on industry averages and may differ wildly from your scheme. 

So how is a final salary pension calculated? It depends. Each pension scheme will have a different set of criteria for calculating transfer values. It’s important to note that these are subject to change as well.

1) Age
2) Scheme retirement age
3) Scheme funding position
4) The performance of the scheme’s investments
5) Cost of living and inflation rates
6) Life expectancy of the ‘average’ scheme member
7) Whether you are married or single

It is worth remembering that Pension scheme administrators have the right to adjust pension transfer values to protect the remaining members of the scheme. If too many people are transferring out and it’s threatening the financial health or future of the scheme, they can reduce transfer values accordingly.

Should I Transfer My Final Salary Pension to a SIPP?

For the vast majority of those opting to transfer out of  a DB pension scheme they seek to transfer their final salary pension into a SIPP.

The main reasons for this being that a SIPP (self invested personal pension) offers flexibility not found in a DB arrangement. 

Pros of a SIPP

The main pros of a SIPP are that they allow you to:

1) Access your pension from age 55
2) Flexibly access your money through flexi-access drawdown
3) Access up to 25% of your pension tax-free from age 55
4) Pass wealth to any beneficiary free of inheritance tax
5) Adjust your income for tax purposes
6) Defer lifetime allowance tax by keeping yourself below the threshold until age 75
7) Choose how and where you invest your money
8) Manage your own investments 

Self-Invested Private Pensions offer a level of flexibility that Defined Benefit pensions cannot offer. However, they also come with risk and costs not encountered in DB schemes.

SIPP Risks and Costs

Investment Risk

All investment carries risk. Investments may fall as well as rise and that’s just something you need to be comfortable with as an investor. Managing investment risk is a delicate balance of making sure you balance potential returns with appropriate risk. 

It’s important to make sure that your investments are diversified and that your portfolio is designed to meet your individual goals.

In an ideal world, our investments would always outperform the market, of course, this is rarely the case. It’s important to review your investment performance regularly to assess performance over time. 

It’s important to make sure that your investments are performing at least in line with the market and to decide when it’s appropriate to switch out of investments that might have previously performed well, but are no longer doing so.

Investment Cost 

Much has been written about the high cost of some investment products, with some so-called ‘experts’ claiming that you should always go for the cheapest investment options to maximise your returns. In our experience this simple isn’t true.

Whilst there are undoubtedly high-cost investment platforms and products that do not represent good value for money, some of the cheaper products simply don’t offer the same performance or breadth that their more expensive counterparts are able to.

What this means, as an investor, is that you need to do your homework and look beyond headline prices. This is where a trusted financial advisor can offer invaluable advice to help you make better investment decisions. 

A low cost investment might sound great but if it continually underperforms the market, you could be making a costly decision.

Unregulated Investments & Scams

Some personal pensions are protected by The Financial Services Compensation Scheme. However, the flexibility of a SIPP means that you can hold all sorts of investments within your pension portfolio. Currently this means you can hold unregulated investments that are not protected should they fail.

Inexperienced investors can easily fall prey to scammers promising high returns with little to no risk. Rogue companies misrepresent the risk of their investments and will often claim that they have guarantees that in reality mean nothing and could leave you with nothing. 

It’s important to remember that if it sounds too good to be true, it usually is. Only invest in regulated investments within your SIPP to avoid exposing yourself to this kind of risk when choosing to transfer a final salary pension to a SIPP.

When is the Best Time to Transfer a Final Salary Pension?

Deciding when is the right time to transfer a Final Salary Pension can be difficult, especially since the decision is irrevocable. 

The fact is, if a pension transfer is appropriate, there’s no right or wrong time to transfer your pension. If you have a solid rationale and the numbers stack up there’s no reason not to do it earlier. That being said, there’s no rush to do it either.

Since you can’t access your money until you’re 55 anyway, common sense would suggest holding off until you’re older and have a clearer idea of what you want your retirement to look like, in fact, many firms will not offer a positive recommendation to transfer for those under 50 years old.  

Research shows that the closer you are to your retirement age the higher the transfer value you’ll be offered, which could be another reason to delay transferring your pension.

On the flip side, if you transfer your pension into a SIPP earlier and experience favourable investment returns, it could be possible to offset a slightly lower transfer value with investment growth.

“Time in the market is better than timing the market.”

It’s important to focus on your goals and the facts in front of you rather than try and chase a higher transfer value or fixate on finding the best time to transfer your final salary pension.

We’ve seen potential clients get burned trying to chase higher transfer values, they’ve seen changes to the market and requested a new CETV thinking it would be higher and it’s come back several tens of thousands of pounds lower.

Equally, we’ve seen clients revisit a pension transfer a year down the road to be offered a transfer value that is several tens of thousands of pounds higher, it’s not something you can predict.

How Long Does it Take to Transfer a Final Salary Pension?

There’s no set amount of time for how long it takes to transfer a Final Salary pension. It depends on: 

1) How quickly  you can obtain your CETV
2) Whether you provide all of the required information to your financial advisor at the start
3) How quickly your pension scheme provides all of the required information to your financial advisor
4) How fast your financial advisor is able to work
5) How long it takes you to set up a new pension
6) How fast your new pension provider works to set up your pension once transferred.

In terms of our client’s experience, we work quickly to ensure that all the information is requested early on so we don’t have unnecessary delays later.

Simon Garber, 2020 Financial’s Pension Transfer Specialist says:

“In terms of getting the advice you need, I would say 3- 5 weeks is a realistic timescale, if you have your CETV available and are able to respond to our information requests quickly. But we have spoken to clients who have engaged financial advisors whose timescales are 3-6 months.

Following our initial checks on the information provided and our subsequent fact finding conversations, clients receive a Comprehensive Final Salary Pension Transfer Report. 

If you’re able to provide all of the information we need, you could expect to be in a position to decide whether a transfer is in your best interests within 3 weeks.  

At that point if you decide to go ahead we will then take you to the next stage of setting up your pension and doing the paperwork for the transfer.”

simon garber pension transfer specialist

Simon Garber says:

“We find many people procrastinate when they receive their transfer value. They’ll come to us with only 2-3 weeks until their transfer values expires (CETVs are only valid for 3 months from date of issue). 

It’s simply not possible to request and receive all the information we need from the pensions trustees and the client within these timescales. 

There’s a misconception that Final Salary Transfer Advice is effectively a ‘box-ticking’ exercise which simply requires a pension transfer specialist to sign a declaration based on the client’s desire to transfer. This is not the case. 

I am required to provide detailed financial advice demonstrating a deep understanding of the client’s finances, goals, personal situation as well as analysing the pension benefits they are considering giving up. 

I must be confident that the transfer would allow them to meet their objectives. I’m also required to 

  • Correct any misconceptions they may have, 
  • Suggest alternative ways to meet their objectives and also
  • Highlight any weaknesses in their retirement plans.

 It’s a complete life strategy.”

The Pension Transfer Process + Time Estimates

Step 1 – Obtain a transfer value.

First, you’ll need to obtain a valid CETV by requesting it online or calling your trustees.

This could take up to a month and possibly longer.

Step 2 – Get financial advice

Speak to a Qualified Pension Transfer Specialist who had the necessary permissions and insurances to give advice on these types of transfers. 

Depending on who you choose, there will be different timescales – some take a few weeks, some can take several months.

You can speed this process up with good client interaction. If you provide the information requested when asked you’ll stop any unnecessary delays your end. 

At this stage, your Financial Advisor will usually have to go to the pension trustees for extra information – trustees vary in their response times. 

Step 3  – Request a transfer from your trustees and complete forms

Once you’ve had transfer advice and you’re happy you want to move forward you’ll need to request the transfer from your pension scheme and complete the forms. 

You may also need to set up a new pension – if you are engaging a financial advisor to conduct the transfer they will do this for you at the same time.

Delays in getting the forms back can increase the amount of time it takes to carry out the transfer.

Step 4 – With the trustees & pension provider

Once all of the forms and information goes to the trustees and pension provider, they will need to do their due diligence:

a) Does the firm have the required permissions for this work?
b) Is the pension provider registered?

They’ll also need to check all of the details of the transfer and process the transfer 

The wait, once you’ve sent all the paperwork back, could easily be another month.

Step 5 – Allocating your money

In the Final Step of the transfer process, once the money has been transferred, your pension provider will need to allocate the money into investments as well as setting up any potential tax-free cash payment or income request.

It could feasibly take another week post-transfer before your money is invested or you receive your tax-free cash payment (if you’ve requested this).

If you’re considering a pension transfer, do your homework on finding a financial advisor you can trust before you request your CETV, this can save you valuable time later and enable you to work at a relaxed pace where you won’t feel pressured into needing to make a decision.

Remember, when it comes to DB transfers, they are irrevocable, so it’s always better to delay making a decision than to make the wrong one.

Why Are Final Salary Pension Transfer Values So High?

In 2019 Final Salary Pension Transfer values hit an all-time high fuelled in part by continuing low-interest rates and market uncertainty over the UK’s exit from the EU.

Final Salary Pension Transfer values are closely linked to the value of Gilt Yields, which have seen historic lows in recent years. As gilt yields fall, transfer values tend to rise.

The link between Gilt Yields and Transfer Values 

In an attempt to ensure that schemes could continue to pay pensions for their members as average life expectancy increased, many schemes opted to ‘de-risk’ their investments by investing in lower-risk government bonds (gilts). 

Gilt Yields, linked to interest rates, have been at an all-time low since 2013. Consequently, many people have seen their transfer values soar

As gilt yields have fallen, it has become more expensive to provide a guaranteed income for life. And since transfer values (CETVs) are supposed to represent a fair exchange for the value of the benefits being given up, transfer values have risen in line with these investment falls.

How Much Does a Final Salary Pension Transfer Cost?

The full cost of a Final Salary pension transfer will depend on a number of factors: how much you pay for transfer analysis and advice, what type of investment you choose afterwards and whether you choose to receive ongoing advice.

Transfer costs you might encounter include: 

1) Transfer Analysis and Advice Costs
2) Ongoing Financial Advice fee
3) Wrapper Charge
4) Annual Management Charge (AMC)
5) Discretionary Management fees
6) Additional Fees & ad-hoc costs

Normally, you’ll pay a percentage of your final salary pension transfer value for a Pension Transfer Specialist (QPTS) to transfer your pension. The fee is usually taken from the value of your pension when it is transferred.

Your transfer fee covers your initial transfer advice and report, the cost to undertake the transfer on your behalf, setting up your SIPP if necessary as well as your initial investment advice and setting up your portfolio.

How much advice costs

It will depend on your choice of Financial advisor as to how much you get charged, but it’s important to factor in, not just the cost of advice, but the cost of the investments your advisor is recommending and any associated fees and rates altogether. (Including platform charges, admin fees, exit fees and penalties etc). 

Despite efforts by the Financial Conduct Authority to press for further transparency for pricing and costs we still see some very sharp practices by well-known names in the industry and would advise that you get a clear breakdown of all costs, in writing, prior to signing any agreements.

Click here for a full rundown of our final salary pension transfer advice fees.

Ongoing Investment Management and Financial Advice

As with any professional service, you’ll pay an ongoing fee for a financial adviser to manage your money and provide you with ongoing planning advice and consultancy services. 

Ongoing fees can vary but expect to pay anywhere between 0.5 – 1.5% of the value of your investment. Whilst this might seem a lot to pay a financial adviser,  evidence published by Royal London in 2019  suggests that you’ll be wealthier in the long-term if you have one.

Platform Fees

Regardless of whether you employ a financial adviser or self-manage your investments your Pension or Platform Provider will levy a fee to use their product. Much like a service charge that you would pay if you owned a flat. It is charged by the company that provides the investment and covers the cost of the running of the platform.

It may also be known as a “product charge”, “platform charge or “policy fee”.

You’ll pay investment fees for the funds that you invest in. The most important of these is the Ongoing Cost of Funds (OCF) which represents all of the charges, including the annual management charge and other charges for services such as keeping a register of investors, calculating the price of the fund’s units or shares and keeping the fund’s assets safe. 

Under EU law the OCF must be displayed in the policy Key documents.

How Do I Transfer My Final Salary Pension?


If your pension transfer value is worth more than £30,000 it is a regulatory requirement that you receive advice from a Qualified Pension Transfer Specialist before moving your pension.

On top of this, all but one of the main SIPP providers now require a positive recommendation to transfer from a Qualified Pension Transfer Specialist before they will accept a transfer.

In order for a Pension Transfer Specialist to recommend a transfer, they must provide a personal recommendation, so they will need to undertake in-depth research and provide a comprehensive report to build a case for you to transfer.

We pride ourselves on experience and efficiency. Because we don’t use middlemen, our streamlined pension transfer process ensures fast turnaround times without compromising on quality.

Plus, you’ll deal with a Qualified Pension Transfer Specialist throughout so you’ll get expert advice every step of the way.

How We Can Help With a Final Salary Pension Transfer & Analysis

If your pension transfer value is worth more than £30,000 it is a regulatory requirement that you receive advice from a Qualified Pension Transfer Specialist before moving your pension. On top of this, all but one of the main SIPP providers now require proof that you have not only received financial advice from a qualified individual but that you also have a positive recommendation to transfer before they will accept a transfer.

Not all Final Salary pensions can be cashed in though. If you’re in an unfunded public sector scheme such as Teachers, Firefighters, NHS workers, Police and the Armed Forces you are not able to transfer out.

Pension Transfers are our speciality. Our friendly, expert team has been helping people to transfer their pensions since 2007. Our process is designed to make sure you get the information you need to make an informed decision and get the best outcome for you. If we think a pension transfer is not in your best interests, we’ll let you know.

If you’re considering transferring your Final Salary Pension, feel free to book a no obligation call with Simon, our Pension Transfer Specialist to see whether a pension transfer could be right for you.

PASSIONATE ABOUT PENSIONS

  • Pension Transfer Specialists since 2007

  • Experts in Defined Benefit Pension Transfer

  • FCA Regulated, Independent Advice

  • 5* Rated Customer Service

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TALK TO A QUALIFIED PENSION SPECIALIST

Speak to a Pension Transfer Specialist and discover your options to help you make the most of your 3i Group final salary pension scheme. We offer a free, no obligation, 20-minute call with one of our specialists. Pick our brains, get your questions answered and find out how to get started or arrange an introductory meeting to get the ball rolling. Call us on 02380 981161 or schedule your free call back online.

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