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Q
Can I transfer my final salary scheme into income drawdown?
AThe vast majority of schemes allow for transfers out. In order to move a scheme, you must first ask for a Cash Equivalent Transfer Value (CETV). Your scheme will then calculate the value of your benefits as a cash equivalent. Your scheme has no fund value like a defined contribution pension and therefore the benefits need to be turned into a cash figure.

Your CETV is guaranteed for 3 months, meaning you have this length of time to decide to whether to transfer or not. If you’re looking to transfer out before your normal retirement date, the scheme will usually apply an early retirement factor, which will reduce your benefits.

The decision to allow a transfer is ultimately down to the scheme Trustees, as they can refuse to allow a transfer out. This would usually be to protect the remaining members within the scheme.

People in ‘unfunded’, State, defined benefit pension schemes – like NHS workers, Teachers and the Armed Fforces, whose retirement is paid for out of general taxation, are not allowed to give up their benefits for a cash equivalent and therefore can’t transfer.

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