Final Salary Pension - father explaining importance of pensions

Final Salary
(Defined Benefit)

Your options explained


Defined Benefit (DB) Pensions often called Final Salary Pensions, offer a guaranteed income in retirement. At Pension Works, we hold the necessary qualifications to provide Final Salary advice. While a lot of people want the guaranteed income, for some, the inflexibility of a DB pension does not allow them to do what they want in retirement. We can assess your DB pension to give you all the options to make informed decisions.


Final Salary Pension Dad Daughter


Should you consider a Defined Benefit transfer?

If you can answer yes to any of the below statements, then the Defined Benefit Review Service could be for you.

Spouse or Partner – You don’t have a spouse/partner or passing on your payouts isn’t important.

Leaving an inheritance – You’d like to pass on what is left of your pension fund to your children or other beneficiaries.

Life expectancy – A medical issue means you may not live for long, so a lump sum in the near future is attractive.

Other income – You have several different pension pots and would like a lump sum to supplement your guaranteed income.

Investment confidence – You are comfortable taking some risk with your money.

Managing your income – You would like the flexibility of taking different sums out each year to meet your needs or looking to take a tax-free lump sum out of your Defined Benefit pension if you’re over 55 years.

With our advice, transferring a Final Salary pension could potentially be a smart move.

Why should you use Pension Works?

We are different from your normal pension adviser who can advise on pension transfers plus being authorised and regulated by the Financial Conduct Authority. Firstly, we are telephone and internet-based, meaning that we keep our running costs low and pass those savings over to you.

Being telephone based allows us to speak to you from the comfort of your own home; there is no need to visit our offices or book in an appointment.

Pension Works, we are one of a small number of UK pension advisers who hold professional qualifications to advise on Defined Benefit and Defined Contribution pensions and can help with planning your retirement. We are a very open and transparent business, meaning we will give you all the information regarding your Defined Benefit pension to make informed decisions regarding your future. The advice we give will always be in your best financial interest.


Final Salary Pension Advice and Assessment

What do we include in our service?


Transfer Value Comparator (TVC) – This shows how the guaranteed monthly income would compare against buying an Open Market Annuity. Does the value stack up and are you getting a good deal?

Gather all the information on your Pensions – This includes policy details, benefits, and a lump sum transfer value.

A Defined Benefit Risk Questionnaire – Our and the Financial Conduct Authority stance is that your Defined Benefit pension is probably in the best place, but we carry-out a risk questionnaire so you fully understand what you could potentially be giving up with a DB pension.

Deliver a full comprehensive report – Our detailed report covers every aspect of your DB pension plus any personal pensions, to give you a full picture. The report includes cash-flow modelling so you will understand how much your Final Salary pension would deliver when you retire, and when you could potentially look to retire.

Offer advice and recommendations – If following our assessment, we recommend transferring your Defined Benefit pension as it is in your best financial interests, we will offer advice and recommendations on which private pension to move your money too and help you get access to your tax-free lump sum cash or take drawdown should you wish to take this.


Woman assessing Final Salary Pension

Final Salary
Frequently asked questions

What happens if my employer goes out of business or can't meet the payments?
If your employer goes out of business – for example, it goes into administration, receivership or liquidation – the scheme you are in is separate to the assets of the company. Funds in the scheme can’t be paid to the employer’s creditors. If you are a part of a money purchase defined contribution scheme, the pension you have built up will not be affected as this type of arrangement is operated independently of your employer. If your company’s pension is part of a salary-related Defined Benefit scheme and it cannot meet its current and future liabilities, the Pension Protection Fund (PPF) helps and may ensure pensions can still be paid, up to certain limits.
What happens to my Defined Benefit pension when I die?
If you die, your Defined Benefit scheme could provide benefits to your spouse/civil partner or children under 23, but this does depend on your scheme and if you’re already taking the monthly income. Speaking with your financial adviser or pension scheme can tell you exactly what benefits your Defined Benefit pension will deliver.
What will my Defined Benefit pension pay me in retirement?
A Defined Benefit or Final Salary pension could pay you a regular income throughout your retirement, which potentially could increase in-line with inflation. To confirm the value your pension will deliver, speak with your financial adviser at Pension Works or directly with the pension scheme.
Can I just take the tax-free cash and defer the income until retirement?
Defined Benefit schemes will often provide you with a tax-free lump sum at retirement, which can either be in addition to the income benefits paid or by commuting (giving up) some of the income payable by the scheme. Normally, you cannot take the tax-free lump sum without also commencing the scheme income payments. This differs from defined contribution pensions which often allow you to take the tax-free lump sum and defer taking any income until it is needed.
Can I retire early with my Defined Benefit pension?
Dependent on your scheme rules, normally a Defined Benefit pension will have a pre-selected retirement age when you can start to receive your pension. Your scheme may agree to start paying it early but are likely to give you a reduced monthly income.
Can I increase or decrease my monthly income from my Defined Benefit pension through retirement?
A Defined Benefit scheme is rigid in its structure and doesn’t usually allow you to take income flexibly. You will get a set amount of money each month (which may escalate each year in line with inflation) until you die, therefore it cannot adapt if your needs change during retirement.
How long does a CETV (Cash Equivalent Transfer Value) last?
CETVs are only guaranteed for a 90-day period and usually only offered for free once per year. If you require a second CETV, some Final Salary schemes will charge you a fee.
Will my Defined Benefit pension stop paying me a regular income before I die?
No, a Defined Benefit or Final Salary pension will continue to pay you a regular income until you die and may also include payments to your spouse/civil partner or children under 23 after your death.

What Defined Benefit pensions can we give advice on?

We can advise on most types of Defined Benefit or Final Salary pensions except unfunded public sector pensions which include the below:

  • Teachers
  • Firefighters
  • NHS Workers
  • Police
  • Armed Forces


Although you cannot move these types of Final Salary pensions, they are seen as the very best employee benefit pensions in providing a generous guaranteed income for the rest of your life.