Case Study: DB Pension Transfer Decision for a Former Construction Manager (2026)

Client Background

Jonathan spent 22 years as a Senior Project Manager with a large UK housebuilding group before taking voluntary redundancy at 55. During his career he accumulated significant benefits in the company’s final salary pension scheme — a genuine occupational defined benefit (DB) arrangement providing guaranteed income in retirement.

Now 57 and self-employed on a part-time consultancy basis, Jonathan came to us with a specific question: should he transfer his DB pension into a Self-Invested Personal Pension (SIPP) to give himself more control and flexibility? His CETV (Cash Equivalent Transfer Value) had been quoted at £258,000.

Jonathan’s wider financial picture included a SIPP worth £74,000 (built up through his self-employment years), a stocks-and-shares ISA of £38,000, and a small amount of rental income (approximately £6,000/yr net) from a buy-to-let property. His wife, Patricia, works part-time and has her own small workplace pension.

The Pension Position

The housebuilder’s DB scheme offered the following guaranteed benefits:

• Annual pension from age 65: £12,200 per year (index-linked to CPI, capped at 5% per annum)
• Spouse’s pension: 50% (£6,100/yr) payable to Patricia on Jonathan’s death
• Tax-free commutation: Option to take up to £42,700 as a lump sum at retirement in exchange for a reduced pension of approximately £9,400/yr
• Scheme funding: 98% funded on a technical provisions basis — a healthy position

Transfer Value Analysis

The Retirement Risk Rating (RRR) — sometimes called the Critical Yield — expresses the investment return a transferred fund would need to generate each year to replicate the DB pension’s benefits. Jonathan’s RRR came out at 6.7% per annum after charges, in real terms.

Achieving 6.7% consistently over eight years (to age 65) is possible in theory, but carries substantial sequencing risk — particularly if markets fall in the early years of drawdown. Jonathan had no other significant guaranteed income to fall back on until State Pension age (67), which further increased the risk of running short.

Why Retaining Was the Right Answer

Several factors pointed clearly towards retaining the DB pension:

• Guaranteed income from 65: £12,200/yr provides a dependable income floor, regardless of what markets do
• Spouse’s protection: Patricia would receive £6,100/yr for life on Jonathan’s death — something a SIPP cannot automatically replicate without careful planning
• Scheme health: At 98% funding, the housebuilder’s scheme was in robust financial health, reducing insolvency risk significantly. The Pension Protection Fund (PPF) also provides a safety net
• Inflation protection: CPI-linked increases (up to 5%) protect the real value of the pension over time
• 2027 pension IHT changes: From April 2027, unspent SIPP funds will become subject to inheritance tax. This weakens one of the traditional arguments for transferring into a SIPP for estate planning purposes

Income Bridge Strategy (Ages 57 to 67)

With Jonathan’s DB pension inaccessible until 65 and State Pension not due until 67, we mapped out a straightforward income bridge using his existing assets:

• Ages 57–63: Rental income (£6,000/yr net) covers day-to-day essentials; consultancy income supplements this
• Ages 63–65: Begin drawing from SIPP (£74,000) — taking the 25% tax-free element first (approximately £18,500), then flexible drawdown. This avoids touching the ISA unnecessarily
• Age 65: DB pension commences at £12,200/yr; rental income continues
• Age 67: State Pension adds £11,973/yr (2025/26 rate), bringing guaranteed income to approximately £24,173/yr — comfortably above the PLSA’s Moderate Retirement Living Standard

The ISA (£38,000) is preserved as a flexible emergency reserve, available tax-free at any time without affecting benefit entitlements.

Seeking Professional Advice

Jonathan’s case illustrates why pension transfer decisions should never be made on the basis of the headline CETV figure alone. The guaranteed income, inflation protection, spouse’s benefits, and scheme health all matter enormously — and can only be properly assessed by a qualified Pension Transfer Specialist.

If you have a defined benefit pension from a private sector employer and are considering your options, a no-obligation initial consultation can help you understand exactly what you have — and whether a transfer is appropriate for your circumstances.

This case study is a hypothetical example for illustrative purposes only. Names and figures have been anonymised. It does not constitute financial advice. Pension transfer values and outcomes vary significantly by individual circumstances. Always seek regulated advice before making pension decisions.