Final Salary Pension Transfer

(Defined Benefit Scheme)

There are around 15m people that are members of defined benefit pension schemes run by some of the country’s biggest private sector employers as well as the public sector.

Unlike the riskier workplace pensions offered to most people today, defined benefit pensions promise to pay a guaranteed income for life when you retire.

Broadly speaking this is based on a percentage of your final, or career average salary multiplied by the number of years you have actively been in the scheme. This is known as the ‘accrual rate’ and is usually quantified as 1/60th, 1/80th or 1/100th of the final salary amount.

In April 2015, there was an introduction of new rules that revolutionised the way in which members of Defined Benefit Schemes members can access their retirement funds, allowing members to tailor their benefits to suit their own requirements.

In order to do so, members of these pension schemes would need to transfer their Final Salary Pension in order to access these flexible pension benefit options. A Final Salary pension provides a guaranteed level of income on reaching the said scheme’s retirement age and anyone transferring or considering transferring needs to fully understand the value of the guarantees being lost.

As continually highlighted by the media, many transfer values are exceptionally high, and by transferring your final salary pension you have complete flexibility on when and how much you can draw.

A final salary pension can be a significant family asset and can be transferred at any age.