Should I transfer my final salary pension?

The rules around a transfer

Advice is compulsory above £30,000

Transfers of safeguarded benefits worth more than £30,000 require regulated advice by law. A scheme will not process one without it.

It is a specialist permission

Defined benefit transfer advice sits behind its own FCA permission, separate from ordinary pension advice.

The starting position is that it is unsuitable

The regulator requires an adviser to start from the assumption that a transfer is unsuitable, and advice has to demonstrate otherwise for your circumstances.

It is irreversible

There is no route back into the scheme once the money has left it.

When a transfer can be appropriate

A transfer can be appropriate where the guaranteed income is of less value to you than its headline figure suggests, for example:

• Serious ill health, where a shortened life expectancy changes the value of a lifetime income to you and your family.
• No dependants and a strong wish to leave the money, since a pot can pass on in a way scheme benefits often cannot.
• Other guaranteed income already covering the essentials, so flexibility on top carries a risk you could absorb.
• A scheme in serious difficulty, though the Pension Protection Fund already provides a backstop, so the scheme's difficulty is not by itself a reason.

Transferring out of a defined benefit scheme means giving up guaranteed benefits, and is appropriate only in some circumstances. Any recommendation depends on a full assessment of your circumstances.

After a transfer you carry the risk that markets fall and the risk that you live longer than the plan assumed.