Even in light of higher transfer values, losing something as valuable as a defined benefit pension is not a decision to be taken lightly and anyone considering this should seek expert, professional advice.
DB pensions give a guarantee of a defined income in retirement that is likely to be hard to generate via a defined contribution pension or other savings.
Advice is required for anyone considering a transfer for DB pensions of greater than £30,000. But DB pension transfers are a high risk and very specialist area of advice and so only advisers who are well experienced in reviewing and advising on these matters and who have a robust and tried and tested service should be considered.
The UK’s decision to leave the EU has pushed gilt yields to historic lows, pushing defined benefit transfer values to record highs, Xafinity analysis has found. Following the EU referendum on 23 June, UK 10-year gilt yields tumbled to below 1 per cent for the first time ever, increasing the cost for DB schemes to meet their liabilities. This automatically increased the value of DB transfers, which are calculated according to the cost of meeting liabilities. Xafinity calculated that on 30 June, a 64-year-old with a DB pension worth £10,000 a year could expect to receive a cash sum of £223,000 if they transferred now.