Defined Benefit Pensions

People employed or previously employed by large national firms may have enrolled into the firm’s Defined Benefit pension scheme. Defined Benefit pensions (DB), sometimes called Final Salary or Gold-Plated pensions offer the employee a secure income for life and usually increase year on year up to and throughout retirement.

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Why do I need financial advice with a Defined Benefit Pension?

The Financial Conduct Authority’s stance on Defined Benefit schemes is that a transfer is unlikely to be in the best interests of 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.

If we give you advice, we will give you one of two outcomes. The first outcome being that we can demonstrate that the transfer is clearly in your best interests, suitable for you and would result in a transfer recommendation. The second outcome would result in a maintain recommendation, meaning that it is not in your best interest to transfer and remaining in your current scheme is the most suitable outcome for you.

It’s a legal requirement to seek expert advice from a fully qualified DB specialist for any Defined Benefit Pension valued over £30,000 or more if you are considering a transfer. At Pension Works, we hold the necessary qualifications to advise on Defined Benefit pensions.

At Pension Works, our Independent Financial Advisers will assess your Defined Benefit pension and the Cash Equivalent Transfer Value (CETV) you’ve received, along with a number of other careful considerations in order to determine if transferring the pension to a Defined Contribution policy is in the best financial interests for you.

Considerations - Why transferring might be right for you

High transfer values
Many companies are offering generous Cash Equivalent Transfer Values (CETV) to employees to move their DB pension away into DC schemes.

Tax-free cash
Defined Benefit schemes work out the amount of tax-free cash you can take in a different way to a Defined Contribution pension. You could get more tax-free cash with a defined contribution pension.

A Defined Benefit scheme has a set retirement age and pays a fixed income that cannot be changed. A Defined Contribution pension allows you to control how much income you withdraw and at what time, and lets you alter this as your needs change over time.

Death benefits & health
Unfortunately not everyone enjoys the same level of health, and if you pass away, a Defined Benefit scheme normally only offers a spouse’s or dependants benefit in the form of a lifetime income. A Defined Contribution pension lets you pass on any unused funds to your loved ones, either as an income or a lump sum.

Scheme solvency
In the current economic climate, some businesses with Defined Benefit schemes have been unable to meet their pension liabilities. Where a business becomes insolvent, the pension scheme could be automatically transferred into the Pension Protection Fund (PPF), which may provide less generous benefits.

Control Tax on Withdrawals
Moving your Defined Benefit pension to a personal pension could help with better tax planning. The guaranteed regular income from a DB pension will be taxed regardless of whether you need the income or not. With a DC pension and income drawdown, you can flexibly take funds, which could potentially help you to take advantage of your tax allowances.

Considerations - Why transferring may not be right for you

Management of Investment risk
A Defined Contribution pension is always riskier than a defined benefit as the value of the pension could go down as well as up depending on the success of your investments. You or someone you pay will also have to manage this risk.

Income for life
Defined Benefit pensions will give a secure income for life, regardless of how long your retirement lasts. A Defined Contribution pension has a fund value that you’ve built up, and once that fund has run out, you will receive no more income.

Guaranteed income for dependants
Based on the scheme rules, your Defined Benefit pension could offer income for your dependants when you die for the rest of their lives too. You would lose these guarantees moving to a DC scheme.

Concern about overspending
Keeping a close eye on your income and spending is important if you transfer your final salary pension to a private pension as you no longer have the fixed guaranteed income. There is more of a risk that you could run out of funds before you die unless you have other pension pots available.

Losing inflationary protection
Defined Benefit pensions rise in line with inflation, if you transfer to a Defined Contribution pension you are not guaranteed the same inflationary protection.

Transfer charges
Transferring from a Defined Benefit pension could incur charges from pension providers, platform operators, or investment managers which would be deducted from the transferred pension pot.

Fall in pension pot value
The value of your pension pot can go up and down, you may not be comfortable with falls in the value of your investment.

Less favourable tax treatment
Defined Contribution pensions get less favourable treatment from the lifetime allowance (LTA), which could mean you end paying more tax on your pension.

Client Criteria

We believe that financial advice should be available to the masses.

With this in mind, we apply the following case acceptance criteria:

  • The Transfer Value must exceed £30,000
  • You must be at least 54 ½ years of age (unless terminally ill)
  • You must be a current UK resident and UK taxpayer (or non-taxpayer)
  • The DB scheme must be UK-based
  • You must not be an Insistent Client (see above)
  • You must not be on means tested benefits (excluding Child Benefit)
  • You must not be planning to move abroad in the next 5 years
  • You must not be an active member of the scheme Pension Works are being asked to advise on
  • We can only provide advice on active transfer values, and a transfer can only proceed if the Cash Equivalent Transfer Value (CETV) deadline has been met. Pension Works are not responsible for any costs associated with requesting a new CETV.
  • If a transfer out of your pension scheme is recommended, Pension Works will also recommend an appropriate investment solution to receive the transfer. We cannot advise clients who wish to choose their own proposed scheme and investments, also known as self-investors.
  • If you are looking at moving any of your pension(s) we strongly recommend you seek specialist financial advice from a FCA regulated Financial Adviser. You must only transfer into a regulated plan/mainstream Investment held with a regulated Investment/Pension company.
  • Pensions Works are unable to consider a transfer for a client who is separated from their spouse or in the process of going through a divorce until there is a court approved and signed pension sharing order or finalised financial settlement.
  • Under no circumstances are you to move away from our recommended investment solution and into an unregulated pension, unregulated investment, non-mainstream investment or invest in Crypto Currency.
  • You must not be looking to utilise your pension to acquire land or commercial property through a SIPP, SSAS or any other pension vehicle.

Final Salary Pension Calculator

  • Your pension could be based on the salary you are earning when you retire, or your income averaged over a certain period. If you're not sure which applies to you, please check with your pension scheme.

Our Process

If you want to use our service all our customers follow this simple process.


Initial Engagment

At the start of the process we take the time to explain everything to you, as well as issuing our Terms of Business and brochure, which includes an overview of our charges. If we have not already obtained a signed Letter of Authority, we will ask you to sign and return this for your pensions.


Information Gathering

When we receive your signed Letter of Authority, we will contact your pension providers to gather any relevant scheme details.


Fact Find Meeting

You will be asked to watch our ‘Triage’ video and review a series of case studies. This provides even more insight to help you decide whether you wish to continue with the advice process. If you agree to proceed, your dedicated Financial Adviser will carry out a detailed ‘Fact Find’ meeting via telephone to gather as much information as possible about your financial life and talk in detail about your objectives.


Initial Advice

This Abridged Advice, is a shortened form of regulated advice which will determine whether a transfer out of your Defined Benefit scheme is unsuitable or unclear. This will be presented to you as an Initial Advice report.


Full Advice

If the outcome of the Initial Advice is unclear, you are able to choose to proceed through to Full Advice. This will involve a full comprehensive analysis of your pension scheme, in order to deliver a personal recommendation. A full report will be issued to you and an advice meeting will be held with your dedicated Financial Adviser. The recommendation will either be to transfer or retain your pension scheme.



Should a transfer be deemed suitable and you wish to proceed, we will issue you the required documents and facilitate the transfer.

Our Fees

You’re able to choose how to pay our Full Advice Fee from the following options:

A. Paid out of your pension pot.

This option will only be available if a transfer proceeds and is made into a pension product that facilitates adviser charging. This is the most tax-efficient way for our fees to be paid.

B. Paid by cheque or bank transfer.

This option is available if the advice is to retain the scheme in place, or to transfer and the payment must be made in full.

Fee Calculator

  • Please enter a number greater than or equal to 30000.
    Please enter a number greater than or equal to £30,000.

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