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Defined Benefit Pensions

Defined Benefit Pension Schemes, also known as Final Salary Schemes, are occupational pensions which provide you with a specific level of income at retirement. The level of income is usually calculated based on a percentage of your final salary and your years of service at the company.

The other type of pension arrangement is called a defined contribution (DC) scheme. If you have a DC scheme, you and your employer will have paid into it over time to grow a pot which you can access from age 55 - usually with no restrictions on what you can do with your pension pot. If you are not sure whether you have a Defined Benefit pension you can check your pension statement or speak to your pension provider.

Our Financial Planners can help you assess the options for your Defined Benefit pension scheme if you’re thinking about transferring.

Why do I need Advice?

Defined Benefit schemes have different rules and regulations than standard defined contribution schemes because you haven’t built up a ‘pot’ of money in the same way as with a DC scheme, instead you have earned an entitlement to a lifetime income. If you decide you would like to transfer out of your final salary scheme, the trustees who run the scheme will convert your lifetime income into a cash sum called a cash equivalent transfer value (CETV). You must then invest the transfer value into a DC pension scheme.

The benefits of a final salary scheme tend to vastly outweigh any advantage of transferring out of the scheme. It is vital and a legal requirement that you get financial advice from a trusted source if you’re considering leaving your DB scheme and have a CETV in excess of £30,000. At Age Partnership we can offer you impartial advice regarding your final salary pension. Our safety first approach means we will only advise you to transfer if it is appropriate for your personal circumstances - you can speak to our friendly team of advisors by calling Freephone 0800 001 4434 or fill in the form above to request a callback.