Pension transfer advice: what to expect

Find out what to expect when getting advice about whether to transfer your defined benefit (DB) pension to a defined contribution (DC) pension.

First published: 03/06/2020 Last updated: 13/05/2024 See all updates

Make sure you understand what you are giving up if you transfer. We believe most people would be best advised not to transfer their DB pension. Read more about the risks involved[1].

As well as the steps and information below, you can watch our series of explainer videos[2].

Steps to follow

  1. 1

    Read the available guidance

    MoneyHelper[3] has comprehensive guidance on DB pension transfers including:

    • the risks of transferring
    • getting advice
    • what to expect from a financial adviser
    • how the transfer process works

    MoneyHelper can also provide free impartial help through its telephone and webchat services. Find out how to get in touch[4].

  2. 2

    Find an adviser

    If you still want to know whether you should transfer, you should find an adviser we’ve authorised.

    You can check our Financial Services Register[5] to make sure a firm or individual is authorised and has permission for the service it’s offering you.  
    Firms who can offer DB transfer advice are listed as ‘advising on pension transfers and opt-outs’.

    If the value of your DB scheme is more than £30,000 you must, by law, get advice from a regulated financial adviser. This is to make sure you’re aware of the risks of transferring.

  3. 3

    Get a transfer value

    You’ll need to get a transfer value from your pension scheme before you can start the advice process. You can get this by asking your scheme administrator or pension provider.

    The transfer value is the amount you’ll get if you transfer.

    Your transfer value is only guaranteed for 3 months, so it’s a good idea to make a shortlist of the advisers you might use before you get the transfer value. This figure may go up or down if it’s recalculated, and you may have to pay for another transfer value if you ask for one again within 12 months.

    Your employer may also offer you an incentive to leave the scheme, such as increasing your transfer value.

    MoneyHelper has more information about transfer incentives[3] and why they might not always be as good as they look.

What to expect from your adviser

Giving up a DB pension is one of the biggest financial decisions you could make.

We’d expect advisers to ask lots of questions about your personal situation and then carry out research. It’s important you provide the information your adviser asks for or they won’t be able to advise you properly.

For example your adviser will want to:

  • understand why you want to give up a guaranteed income
  • find out how much you’re prepared to change your lifestyle in retirement if your pension pot was lower than you expected

You’ll need to tell the adviser if you want them to recommend where the money should be invested if you transfer, or if you’ll decide for yourself.

When they make a recommendation to you, we’d also expect advisers to provide you with a suitability report.

This written report should:

  • tell you what their recommendation is
  • explain the reasoning behind this recommendation
  • help you understand the risks and benefits of transferring or staying in the scheme

You should keep in mind that some firms are independent so can offer the full range of available financial products and providers if you transfer. Others are restricted so can only focus on a limited selection of products or providers.

Fees

Your adviser must tell you how much they charge for advice. In most cases, you will need to pay the same amount for full advice, whether or not you go ahead with a transfer.

Abridged advice

Your adviser can offer you a short form of advice, known as abridged advice, to confirm that you’re not suited to a transfer. But you need to know that:

  • if they can’t confirm that a transfer is unsuitable for you then they can only give you a statement explaining that they can’t make a recommendation unless you take full advice
  • if you’ve only taken abridged advice, then an adviser can’t give you a confirmation that you’ve taken transfer advice
  • if after getting abridged advice, you want to transfer your DB pension to a DC scheme, you still need to take full advice to get a confirmation to say you’ve taken the advice

Video: What to expect from pension transfer advice

Our first of 5 videos explaining our expectations of financial advisers when advising you on pension transfers
Pension transfers - Introduction

Pension transfers - Introduction

Transcript[6]
: Information changed Broken link fixed
: Editorial amendment Theme updated on timeline.
: Editorial amendment page update as part of website refresh
: Information changed pension transfer advice videos updated

Considering a defined benefit pension transfer[1]

Pension transfer advice: what to expect[11]
Advice checker: defined benefit pension transfers[12]
Defined benefit pension transfers redress calculations[13]

1. Expectations of financial advisers[14]
2. Mandatory information and choosing an adviser[8]
3. Getting to know you[9]
4. Adviser research and communication of advice[10]
5. Post advice[11]

Source URL: https://stager.fcatest.org.uk/consumers/pension-transfer-advice-what-expect

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