TL;DR
Transferring a defined benefit pension worth more than £30,000 requires regulated financial advice from an FCA-authorised adviser. DB pension transfers are often unsuitable and the FCA has issued guidance that the vast majority should not proceed
Last reviewed: June 2026 | Sources: Pensions
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Pensions Key Facts: Pension Transfers DB transfer threshold: £30,000 — regulated advice requiredFCA position: most DB transfers are unsuitableCETV: cash equivalent transfer valueRegulated advice cost: £2,000-£5,000 typicalRegulator: FCA / TPR |
The two types of pension transfer
Defined benefit (final salary) pension transfers and defined contribution pension transfers carry fundamentally different risks. A DB pension provides a guaranteed income in retirement; transferring to a DC scheme gives a lump sum but removes the guarantee. A DC to DC transfer moves invested funds between providers without losing a guarantee.
The risks most people do not check
DB transfer advice is legally required and expensive. Transfers from defined benefit schemes with a value over £30,000 require regulated financial advice from an FCA-authorised pension transfer specialist. This advice typically costs £2,000 to £5,000 and cannot be funded from the pension being transferred without HMRC complications. The adviser must provide a personalised recommendation.
The FCA's position is that most DB transfers are unsuitable. The FCA has been explicit that for most people, giving up a guaranteed DB pension income is not in their best interest. The cash equivalent transfer value offered by schemes is calculated to be actuarially fair at the point of transfer but the guarantee lost typically has greater long-term value for most members.
CETV values are time-limited. A cash equivalent transfer value quote is valid for three months. If the transfer does not complete within this period, a new calculation is required which may produce a different value. DB scheme funding positions affect CETV calculations.
Scam risk is very high in pension transfer. Pension transfer scams, where advisers receive kickbacks for recommending unsuitable transfers into fraudulent investments, have caused significant losses. The British Steel Pension Scheme mis-selling scandal is the most prominent example. Use only FCA-registered advisers verified on the FCA register.
What to verify before transferring
For DB pensions: obtain the CETV from the scheme, seek regulated advice from an FCA-authorised pension transfer specialist, compare the guaranteed income against realistic DC income projections. For DC pensions: compare charges, investment options and any safeguarded benefits before transferring.
Where to complain
Unsuitable pension transfer advice is handled by the Financial Ombudsman Service and, for scheme-level issues, the Pensions Ombudsman. FSCS protection of up to £85,000 applies if an FCA-authorised firm has failed.
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Disclaimer This article is for information only and does not constitute regulated financial advice. Always verify current terms with relevant providers and seek regulated advice for your specific circumstances. Kael Tripton Ltd is an independent editorial publisher and is not regulated by the FCA. |
Frequently asked questions
Can I transfer a defined benefit pension without taking advice?
Only if the transfer value is under £30,000. Above this threshold, regulated advice from an FCA-authorised pension transfer specialist is required by law. Some schemes require advice regardless of value.
What is a cash equivalent transfer value?
A CETV is the lump sum the DB scheme would pay to another pension arrangement in exchange for giving up your defined benefit entitlement. It represents the scheme's calculation of the capital needed to fund your guaranteed benefits. CETVs are time-limited, typically three months.
What are safeguarded benefits and why do they matter?
Safeguarded benefits include guaranteed annuity rates, defined benefit promises and other protected features. Transferring away from safeguarded benefits almost always requires regulated advice and may result in the permanent loss of valuable guaranteed income.
Is it safe to transfer my pension to a new employer's scheme?
Transferring a DC pension to a new employer's DC scheme is generally straightforward and lower risk than a DB transfer. Compare charges and investment options between schemes. Check whether the new scheme accepts transfers and whether any benefits would be lost.
What happened in the British Steel pension scandal?
Thousands of British Steel Pension Scheme members were advised by unscrupulous advisers to transfer out of their defined benefit scheme into inferior products. Many lost significant retirement income. The FCA took enforcement action and the FSCS paid significant compensation. It illustrates why regulated, independent DB transfer advice is essential.
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Sources FCA: Pension Transfer Guidance |
