Defined Benefit pension advice

Reliance: You will not be reliant on the pension income payable by the DB scheme because your DB scheme pension rights represent only a small percentage of your overall pension rights and/or you have substantial other investments

Investment choice: You prefer your pension assets to be invested in line with your agreed risk profile.

Early retirement: You have an immediate need for income and/or a tax free cash lump sum but the DB scheme won’t allow early retirement.

Tax free cash: The tax free cash lump sum that can be paid at retirement following the transfer to a DC scheme may be higher.

Income flexibility: You want to take benefits via income drawdown in order to benefit from maximum flexibility in terms of how often, and how much, income you can withdraw.
The amount of income you withdraw can be made in sync with any fluctuating income you may have from other investments and/or other employment or self-employment and could therefore be a useful tool for managing your liability to income tax.

Higher income: In some circumstances, for example if you suffer from ill-health or are single, you may be able to get a higher income by buying an annuity with your transfer value than you can get by taking an income from your DB scheme.

Death benefits: Unlike pension death benefits paid from a defined contribution (DC) arrangement which can be paid to any nominated beneficiary, DB scheme pension death benefits can only be paid to a dependant (such as a surviving spouse or civil partner) and following their death there is no option for the pension death benefits to be passed on to the next generation.

Value for money: Transfer values are historically high at the moment due to low guilt yields and even if you are single the transfer value offered will still normally include allowance for a spouse’s pension.

Reliance: Your DB scheme pension rights represent a significant percentage of your overall pension rights and you don’t have substantial other investments to fall back on.

Investment choice: If you remain a member of the DB scheme no investment decisions need to be made but if you do transfer, your chosen investments will need to be regularly reviewed to manage returns and volatility.

Income guarantees: You will give up a guaranteed inflation linked income in retirement.

Survivor’s pension: If you are married or in a civil partnership you could be giving up a potentially valuable survivors pension, especially if your spouse or civil partner will not have sufficient provision of their own.

Income flexibility: Whilst if you do enter income drawdown the ability to draw as much of as little income as you want, whenever you want, can be a useful tax planning tool this new ‘pensions freedom’ brings temptation and your retirement fund could be depleted quickly if you draw too much, too soon.

Lower income: If the invested fund performs poorly you could be much worse off in retirement than you would have been had you not transferred.

Death benefits: If the payment of death benefits is important to you, it might make more sense to review your protection policies to see if a life insurance policy could meed this objective without forgoing the security of your DB scheme pension promise.

Death benefits: If the payment of death benefits is important to you, it might make more sense to review your protection policies to see if a life insurance policy could meed this objective without forgoing the security of your DB scheme pension promise.