Defined benefit pension transfers

Members of defined benefit (DB) pension schemes may have the option to transfer their benefits to another pension arrangement, but this process is subject to strict rules and safeguards.

As part of our Bitesize Technical series, Senior Technical Consultant, Joshua Croft explains the rules around defined benefit pension transfers.

Key insights on defined benefit pension transfers

Members of DB schemes have a statutory right to a cash equivalent transfer value (CETV) if they’ve stopped accruing DB benefits and are more than one year from the scheme’s normal retirement age.

A guaranteed CETV can be requested once every 12 months; trustees may allow more frequent requests or provide a CETV even without a statutory right.

Safeguarded benefits, such as DB pensions, include valuable guarantees which may be lost on transfer or conversion. If the value of safeguarded benefits exceeds £30,000, members must obtain independent advice from an FCA-authorised adviser before transferring.

Where schemes contain both safeguarded and non-safeguarded benefits, the non-safeguarded portion may be transferred without advice, regardless of DB value.

Members must provide trustees with a written statement from the adviser, confirming that advice was given, and including the adviser's authorisation, FCA reference, and identifying details of the member and scheme.

More Bitesize Technical

Want to snack on another technical insight? Start from the beginning of our latest series on death benefits, here.

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