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FINAL SALARY PENSION TRANSFER ADVICE

The definitive guide to Final Salary Pension Transfer

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TABLE OF CONTENTS

    If you’re considering a final salary pension transfer, it’s important to get the basics covered first. So that you understand what it is that you’re dealing with.

    We are qualified pension transfer specialists with over 17 years experience with Defined Benefit pensions and we also hold the Pension Transfer Gold Standard which holds us to a higher standard, ensuring you get the best advice available.

    This guide is designed to give you basic, generic information, it shouldn't replace tailored financial advice If you'd like to talk about your pension get in touch today and our pension transfer specialists can help you decide what's right for you.

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    What is a final salary pension?

    Also known as a Defined Benefit Pension, these are the ‘gold-plated’ pensions you often hear about in the news.

    A Defined Benefit Pension or Final Salary Pension guarantees its members a fixed retirement income for life (protected against inflation).

    The amount you’ll get is normally calculated on your salary, how long you’ve worked for your employer and a calculation made under the rules of your pension scheme. This amount was often based on your salary at the end of your employment, hence the name ‘final salary’.

     

    Final Salary pension schemes are generally far more generous than their Defined Contribution (Personal Pension) counterparts. In fact, they are often referred to as ‘gold-plated’ pension schemes for this very reason.

    The Pension and benefits you will receive are pre-defined by your pension scheme administrators. Whilst each scheme is different in the full range of benefits it offers, members will receive:

    • A guaranteed amount of Pension income for life
    • Protection against inflation – the amount of money you receive goes up each year, normally in line with inflation. This protects the value of your pension over time.

     

    Other benefits may include

    • a protected retirement age,
    • a survivor's pension for your Spouse/dependent children if you die (the amount varies by scheme)
    • the option to take a cash lump sum on retirement.

    Historically you could find Final Salary pension schemes in both the public and private sector, but they have been rapidly disappearing from the private sector with few remaining open to new members.

    The rarity and value of these schemes should not be underestimated.

    How is a final salary pension calculated?

    Each scheme has its own rules that set out the basis of accrual and benefits, but most schemes provide benefits based on 4 key elements:

    1. The length of the pensionable service you were credited with as being an active member of the scheme i.e. how long you were working for your employer as an active member of your Final Salary pension scheme.
    2. Your pensionable salary
    3. The circumstances under which benefits are taken from the scheme (retirement, early payment, early leaver, ill-health, death etc.)
    4. The formula or rate of ‘accrual’ set by the scheme administrators, which uses service and salary to work out your pension.

     

    Accrual Rates: How do they work?

    Your accrual rate will depend on the scheme you are in – could be 1/60, 1/80 or some less generous schemes could use 1/125. The example below shows how your accrual rate could affect how much money you get in retirement.

     

    accrual rate example final salary pension

    Working out your Cash Equivalent Transfer Value

    The amount being offered for Final Salary Pension Transfers varies hugely from scheme to scheme with some schemes offering as much as forty times your pensionable income.

    Factors that can affect your CETV include

    1) Your age at the time of transfer request
    2) Your scheme retirement age
    3) You pension scheme's 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

    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.

    If you're trying to work out your Cash Equivalent Transfer Value, some pension schemes will automatically update your CETV on your annual pension statement, in other schemes you will need to request it.

    We have developed a Transfer Value calculator that you can use to give you a rough guide of what you could be offered but it is always best to request an estimate from your pensions scheme administrator.

    Try our CETV Calculator

    Use our simple CETV calculator to see what your transfer value could be

    Should I transfer my Final Salary Pension?

    For the vast majority or people, the answer to this question is generally, no. Final Salary Pensions provide valuable benefits that will be lost if you transfer out. And these benefits usually cannot be replaced on a like-for-like basis. For most people a Defined Benefit pension transfer is not in their best interests.

    That said, whether or not you should transfer is entirely dependent on your individual circumstances and goals. It’s not possible to give you an answer to this question without doing a full analysis of your situation. 

    As general guidance though there are factors that will make it more or less likely that a transfer would be suitable for you, which you can consider before you explore further.

    Questions to ask yourself before you transfer your DB Pension

    1. Are you married or do you have dependent children?
    2. Do you have relevant investment experience?
    3. Are you comfortable with investment risk?
    4. Is your DB pension a supplementary income source that you could comfortably live without?
    5. Is your DB pension protected by the PPF?
    6. Can you achieve your stated goals staying within your existing DB scheme?

    Find out why these questions matter below:

     

    Other questions to ask include

    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.

    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 and protected benefits.

     

    Reasons you might want to transfer

    Whilst Defined Benefit pensions are highly valued (and valuable) due to their guaranteed benefits, they are, by their nature, inflexible, especially when compared to the flexibility offered by Defined Contribution pensions.

    There are 6 main reasons you might consider transferring your Final Salary Pension

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      A high transfer value

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      Potential to access a larger tax-free lump sum

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      Flexibility to access drawdown from 55

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      Early retirement

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      Passing on wealth when you die*

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      Ill health

    • Tax-planning

    *It’s worth noting that Defined Contribution Pensions and SIPPs can usually be passed on free of Inheritance tax to named beneficiaries. find out what happens to Defined Benefit Pensions when you die

    Final salary transfer benefits explained

    Wondering Is it worth transferring a final salary pension? We've explained the main benefits below:

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    Final Salary pension transfer risks

    The general advice for transferring your Final Salary Pension is – don’t, and for good reason.

    Choosing to move a Final Salary Pension is an irrevocable decision, so even if the benefits of a Final Salary Pension Transfer appeal to you, you must also seriously consider the risks involved before making your decision:

    The risks of pension transfer include:

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      Running out of money in retirement

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      Investment risk

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      Stress of managing your money

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      Triggering the Lifetime Allowance Tax

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      Loss of spouse's pension

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      Loss of inflation protection

    Download our definitive guide to pension transfers

    Discover everything you need to know about Defined Benefit Pension transfer in our expert guide

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    Is a pension transfer right for me?

    When you transfer your 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. 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):

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

    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 60-66 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.

    Specialist pension transfer advice

    Our Independent pension transfer advice is designed to help you meet your goals in the best way for you, whether that’s exploring your options within your scheme or moving your pension to a defined contribution arrangement.

    pension transfer analysis

    TRANSFER ANALYSIS

    First we start with understanding you and where you want to be.

    We’ll discuss your goals, talk about the risks and benefits of pension transfer and carry out a detailed fact-find and analysis to see if transferring is really in your best interests.

    pension_ transfer report _recommendations

    REPORT & RECOMMENDATIONS

    You'll receive an in-depth report that assesses your suitability to transfer based on your goals, risk assessment and your personal and financial situation.

    You'll receive suggestions for alternative courses of action & our expert recommendation.

    Ongoing financial advice & transfer management

    MANAGE & REVIEW

    If appropriate and if you decide to go ahead with transferring your pension, we will seamlessly manage your transfer to your recommended arrangement, offer regular portfolio rebalancing and provide ongoing advice & support to ensure you stay on track.

    Frequently Asked Questions

    How long does it take to transfer a final salary pension? (Timescales)

    Once you receive your CETV (cash equivalent transfer value, you have 3 months in which to decide whether you will transfer or not before that offer expires. It’s important that you factor in the time it will take to receive the advice you need. Ideally before or as soon you receive your CETV.

    Across the industry it’s not uncommon to hear of defined benefit pension transfers taking up to 6 months, sometimes longer. 

    Our streamlined process is far quicker than that and we can usually turn around your report and transfer recommendation in around 3-4 weeks as long as we have all of the information we need. 

    It’s an in-depth process, but since you’ll always deal directly with our Qualified Pension Transfer Specialist, there won’t be any unexpected delays from our end. 

    However, you should be aware that we may need to request additional information from your pension trustees in order to provide you with the advice you need and this may cause delays which are beyond our control. 

    Delays in the pension transfer advice process could cause you to miss your CETV transfer deadline and will result in you having to request a new transfer value. Transfer values are subject to change so this could work for or against you.

    There are a number of other factors that can affect how long a pension transfer might take including:

    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.”

    Our pension transfer specialist 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.”

    What happens to your Final Salary Pension when you die?

    Inheritance rules for a Final Salary Pension differ from scheme to scheme. Final Salary Pensions will normally pay a reduced pension of 50% to your spouse or dependent child when you die. Exactly how much, depends on when you die and the scheme you’re in.

    Some schemes may also pay out a lump sum if you die in the early years of your retirement.

    extract from What happens to my final salary pension when I die? Read the full article here.

    Does a final salary pension payout on death?

    If you die while you’re still paying into a final salary pension, you may get some form of life cover. Normally, if you die, it’s paid as a cash lump sum that is paid tax-free. The amount will depend on the type of scheme you belong to, but it is often based on a multiple of your salary or pensionable earnings.

     

    What happens if I die as a deferred member?

    A deferred member is someone who has stopped paying into the pension scheme. If you die after leaving the scheme but before taking your benefits i.e. you pay into the scheme but then move jobs, your Spouse may get a reduced amount. Depending on when you left they may work the benefits out differently, some may only pay a refund of your own contributions. You must check with your scheme to find out the exact rules for deferred members.

    Some schemes may provide life cover, which could be a multiple of your pensionable earnings when you left the scheme, but this is not common and might be something to consider putting in place yourself.

     

    Who gets your final salary pension after death?

    If you are married or have a registered civil partner, your spouse or partner will normally automatically receive a reduced pension paid by your Final Salary scheme.

     

    Can cohabiting and common law partners inherit Final Salary Pensions?

    Historically, no. Final Salary Pensions only paid out to your surviving spouse or registered civil partner. However, a separate Supreme Court case in 2017 saw one long-term, cohabiting partner given automatic rights to her late partner’s pension.

    This landmark case paves the way for other cohabiting partners to receive automatic rights to defined benefit pensions, experts warn against making assumptions about who will inherit your pension if you pass away.

    The advice is still to always check your scheme’s provisions, as there may be qualifying conditions that apply to survivors pensions.

    N.B. To avoid complications you may need to nominate your partner as your beneficiary whilst you are still alive.

     

    Are children’s pensions payable?

    Defined Benefit Pension Scheme’s may pay a survivor’s children’s allowance or a Spouse’s pension, but not normally both and will normally only pay a children’s allowance if there is no spouse.

    Again, rules change depending on the scheme but normally to be eligible for a children’s allowance they must be under 18 (or under 23 if in full-time education) and they must be your own or adopted children or financially dependant on you.

    The amount of children’s allowance payable is usually equal to the spouse’s pension and will be split equally between any qualifying children.

    Children's pensions are not payable to non-dependent adult children. You will need to make other provisions.

     

    Can a family member inherit a pension?

    Some Final Salary Pension Schemes will make an allowance for dependent children i.e. a son or daughter who is under 18 or who is still in full-time education. But if you have a non-dependent adult child, a sibling or a parent that you support financially, it is unlikely that they will be eligible to inherit your Final Salary Pension.

    Does CETV increase with age?

    According to research by Royal London and LCP, CETV does increase the closer you are to your scheme's retirement age.

    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.  

    CETV DB Transfer values rise the closer you are to retirement

    On average, If you opt to transfer your pension when you’re 10 years away from the scheme retirement age, you’ll be offered far less than if you were just 1 year away from retirement.

    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.

    That being said, there are other factors that can affect transfer values which include:

    • Gilt yield values
    • The investment performance of your pension fund
    • The funding position of your pension fund 
    • The way your pension scheme calculates inflation
    • The average life expectancy of scheme members.

    Transfer values can go down as well as up by both small and significant amounts (over £100K) and we have seen both happen.

    How Much Does a Final Salary Pension Transfer Cost?

    Transferring your Final Salary Pension to a personal pension arrangement may give you access to a large lump sum and offer you the freedom to invest and spend your pension pot as you see fit, but there can be significant costs and fees involved. 

    The full cost of a Final Salary pension transfer will depend on a number of factors:

    • How much your pension is worth
    • How much you pay for pension transfer advice,
    • The costs of ongoing investments post transfer including any ongoing advice fees.

    The value of your pension will usually affect how much a transfer costs you, since most work of this kind operates on a percentage of the value of your fund.

    The cost of Pension transfer advice can range from advisor to advisor, so it’s worth shopping around to find the best deal for you, taking into account future advice costs and the costs of recommended products and associated platform charges.

    Changes made by the Financial Conduct Authority in 2020 mean that contingent charging has now been banned. This means that you must be charged the same amount for advice whether you are recommended to or choose to transfer or not.

    Regardless of who manages your money post-transfer you’ll be subject to investment costs depending on which investment products you choose. 

    The types of investment 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

    Read more about the cost of transferring your final salary pension.

    What is my 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 

    • Your Age
    • Scheme Retirement Age
    • Cost of Living
    • Life Expectancy of the average scheme member
    • 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.

    You can also use our Final Salary Pension Calculator to get an estimate of your CETV

    Can I transfer my Defined Benefit pension myself?

    If your Final Salary pension is worth less than £30,000 you are free to transfer your pension yourself without seeking advice. 

    If your transfer value is higher than £30,000 then it is a regulatory requirement that you seek ‘appropriate’ advice from a qualified pension transfer specialist. This means they will need to provide you with an in-depth report exploring your suitability to transfer and a personal recommendation to transfer or not.

    Things a pension transfer specialist will consider:

    • Your age
    • Your financial situation and obligations
    • Your long-term goals and motivations for transfer
    • Any retirement plans you have
    • Your general health and life expectancy
    • Previous Investment experience
    • Your understanding of and suitability for the risks involved in pension transfer
    • Future Investment strategy

    Almost all of the big pension providers and platforms now require you to have a positive recommendation to transfer. Which means, if a pension transfer specialist has deemed it not in your best interests to transfer, you may find it difficult to transfer your pension yourself. 

    Whilst this might seem frustrating, these rules are designed to protect you and your pension in the long term.

    Even if you are able to transfer your pension yourself you should be very careful about doing so. 

    Whilst some pension providers make pension transfer sound like the sort of thing you can do over a cup of tea, doing so could prove extremely costly to your future.

    Protecting valuable pension benefits

    Defined Benefit pensions have incredibly valuable benefits attached to them which will be lost if you transfer.

    Pension Benefits could include (but are not limited to):

    • Protected pension age (for early retirement)
    • Guaranteed income for life  
    • Tax-free cash
    • Life insurance
    • Spouse/survivor's pension provision

    So it's important to have a Pension Transfer Specialist take a look at your old pensions and make sure that you haven't missed something that you might regret giving up.

    Better safe than sorry.

    The problem with self-management & pensions

    In the age of robo-advice and easy ways to invest, it might seem like a good idea to manage your pension yourself but the research makes for grim reading.

    Research by Insurance giant Zurich found that almost 41% of those in drawdown without financial advice will run out of money in retirement.

    The research found that​​​​​​​ a large percentage of self-investors were unprepared and uneducated about the risks they were taking on. Despite that many were choosing to go it alone without consulting a financial adviser. 

    If your motivation for consolidating your pension yourself is to save money, you should consider the high cost of making a mistake and also look at the research published in 2019 showing that, even when you take fees into account, those who take Financial Advice end up on average nearly £50,000 better off over a decade.

    What happens to a Final Salary Pension in Divorce?

    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. 

    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. 

     

    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.

    FCA Advice on Defined Benefit Pension Transfers

    The Financial Conduct Authority are the regulatory body that oversee financial advice in the UK.

    It's their job to ensure that consumers get quality financial advice that safeguards their best interests.

    If you want to find out what you should be looking for when it comes to receiving financial advice for your defined benefit pension transfer watch this helpful video below.

    What is the Pension Transfer Gold Standard

    The Pension Gold Standard is a voluntary code of good conduct for financial advisors. It was set up by the Pensions Advice Taskforce* to make sure people receive ethical and professional advice for Final Salary Pension Transfers.

    Whilst it is a regulatory requirement that all financial advisors pay due regard to the interests of their clients, and treat them fairly, The Gold Standard defines 9 core principles that a financial advisor must stick to.

    What this means is that The Gold Standard enables you to find an advisor with your best interests at heart, who operates in an ethical and professional way, above and beyond what is usually expected from them, when assessing your pension transfer options.

    Read the full article here 

    The 9 Pension Transfer Gold Standard Principles

    1. Help clients understand when advice is appropriate.
    2. Ensure advice given supports the clients overall financial wellbeing in the context of their stated objectives.
    3. Ensure client understanding and acceptance of all charges.
    4. Ensure the most appropriate and updated technical skills are applied.
    5. Transparent management of Conflicts of Interest.
    6. Help clients understand the cost of transferring benefits.
    7. Avoid unregulated investments and introducers.
    8. Transparency in advice processes and outcomes.
    9. Promote the Consumer Guide to the Pension Transfer Gold Standard.

    Download the Pension Transfer Gold Standard guide for consumers here

    Pension gold standard for pension transfers guide [PDF]

    Download our definitive guide to pension transfers

    Discover everything you need to know about Defined Benefit Pension transfer in our expert guide

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