A pension transfer from a final salary (salary-related) pension scheme means giving up your benefits in the scheme in return for a cash value, which is invested in another pension scheme.
Taking this step needs careful consideration and expert financial advice.
Your Final Salary Pension Transfer Value
If you decide to transfer out of your workplace final salary pension scheme, the trustees must convert the benefits you’ve built up into a cash sum, called a transfer value (also known as a cash-equivalent transfer value or CETV).
You must then invest this in:
- A pension scheme with another employer
- A personal or stakeholder pension
- Or a buy-out contract (also sometimes called a section 32 contract)
What to expect from Retirement Solutions
Risks of staying in your final salary scheme
Staying in a final salary pension scheme is not risk free.
If your employer is still in business, it usually has to make sure the scheme has enough funds to provide the full entitlement to members. But some of the employers sponsoring these schemes have gone bust leaving insufficient money to pay the pensions promised.
If an employer is going out of business without enough funds in its pension scheme, the Pension Protection Fund may be able provide compensation but this may not be the full amount of the pension you’ve accumulated.