Case Study: Should I Transfer My £480,000 DB Pension CETV? A 2026 Guide

A large cash equivalent transfer value (CETV) is not, on its own, a reason to transfer a defined benefit pension. A high figure mostly reflects how valuable the guaranteed income is. In the illustrative example below, the likely outcome of regulated advice would be to keep the DB pension, because the guaranteed income and spouse's pension outweigh the case for flexibility.

Quick summary

• Illustrative example: David, 59, a senior engineer with a DB pension CETV of £480,000
• The dilemma: keep a guaranteed income of £22,000 a year, or transfer and manage a large sum himself
• Likely outcome of regulated advice: keep the DB pension, because the guaranteed income and spouse's protection outweigh the flexibility arguments
• Key lesson: a large CETV is not automatically a reason to transfer. The quality of the guaranteed income matters more

When a large CETV arrives, it can feel like an opportunity. £480,000 is a significant sum, the kind of number that makes people wonder whether they would be better off managing the money themselves rather than relying on a pension scheme.

This illustrative example walks through the points a regulated adviser with the pension transfer permission might typically weigh up for someone in that position, and why, despite the headline figure, keeping the defined benefit pension would be the likely outcome.

Important: This is a hypothetical example for education only. David is not a real person and the figures are examples only. It is not financial advice. Pension transfer decisions depend entirely on individual circumstances. If your safeguarded benefits are worth more than £30,000, you must take regulated advice from an FCA-authorised adviser with the pension transfer permission before you can transfer.

David's background

Illustrative example: imagine David, aged 59, who has received a CETV of £480,000 from his company's final salary pension scheme. He has worked for the same engineering firm for 28 years and is considering voluntary redundancy.

His financial picture:

• DB pension: £22,000 a year from age 62, with a 50% spouse's pension for his wife Sarah
• State Pension: full new State Pension expected from age 67
• DC pot: a separate workplace pension of £87,000
• Mortgage: paid off
• Savings: £35,000 in ISAs
• Health: good, with no significant medical history
• Sarah's income: part-time work and her own small DC pension of around £42,000

David has read an article online suggesting that a CETV of 20 times the annual pension or more could be "good value". His CETV of £480,000 against a £22,000 pension is a multiple of 21.8 times, above the figure that sometimes gets quoted.

Key point: what is a CETV?

A cash equivalent transfer value (CETV) is the lump sum a pension scheme will pay to another pension in exchange for you giving up your right to a guaranteed income for life. The scheme actuary calculates it using factors such as your expected pension, your age, gilt yields and the scheme's funding position.

Asking for a CETV does not commit you to transferring. But once a transfer goes ahead, it cannot normally be reversed. A CETV is usually guaranteed for three months from the guarantee date. Read more in our guide to transfer values.

What David wants

David's reasons for considering a transfer are understandable:

1. Flexibility: he wants to control when and how he takes the money, rather than being tied to a fixed £22,000 a year from 62.
2. Death benefits: he worries that if he dies early, the scheme keeps the money. With a SIPP, unused funds could pass to his children.
3. Inheritance tax planning: he knows unused pension funds are due to come into the scope of inheritance tax from April 2027.
4. Investment control: he believes he could invest £480,000 more effectively himself.

These are legitimate concerns. But regulated advice is designed to weigh them carefully against what would be given up, and in David's case the picture is not straightforward.

How a regulated adviser analyses a transfer

Under FCA rules, an adviser considering a defined benefit transfer must carry out an appropriate pension transfer analysis (APTA). It looks at your whole financial position and objectives, not just the numbers. It must include a transfer value comparator (TVC), which shows what it might cost to buy the same benefits in the market compared with the CETV offered. You can read more on the FCA's pension transfer page.

Many advisers also look at a required rate of return: how much the £480,000 would need to grow each year, after charges, to provide the same income as the DB scheme, including the spouse's pension and inflation increases.

In an example like David's, the analysis might show:

• To match the guaranteed DB income (inflation-linked, with a 50% spouse's pension) over 30 years, the transferred fund might need to grow by around 4.8% a year after charges.
• That might be possible, but it is not guaranteed. A balanced portfolio of shares and bonds can go up and down significantly from year to year.
• A big market fall in the early years of retirement, known as sequence of returns risk, could permanently damage the fund's ability to keep paying an income.

Key point: sequence of returns risk

The order in which investment returns happen matters a great deal in retirement. A large fall in markets in the second year of retirement, while you are drawing an income, can permanently reduce how far the fund can recover. A guaranteed DB pension does not have this risk.

What David would give up

The following benefits would be lost for good on a transfer:

Benefit	DB pension (keep)	SIPP (transfer)
Income guarantee	Guaranteed for life	Depends on investment performance and withdrawals
Inflation protection	Increases in line with the scheme rules, often CPI with a cap	Not automatic; the fund must pay for it
Spouse's pension	50% (£11,000 a year) automatically	Depends on what is left in the fund
Longevity protection	Income continues however long you live	Risk of running out of money
If things go wrong	If the employer fails, the Pension Protection Fund usually pays compensation	Investment losses are not protected; FSCS cover may apply if a firm fails

The inheritance tax question

David raises the change due in April 2027. Unused pension funds and most death benefits are due to come into the scope of inheritance tax from 6 April 2027.

This is a legitimate planning point, but in an example like this it may not be as decisive as David assumes:

• The DB pension mainly provides income, not a pot of capital. If David dies after drawing income for many years, the scheme pays Sarah's spouse's pension rather than leaving a pot behind.
• The DC pot of £87,000 is the part of his pensions more directly affected by the change, because any unused amount could form part of his estate. That is where inheritance tax planning might focus.
• In this example, David and Sarah's combined estate might not be large enough for inheritance tax to be a major concern, once the allowances available to married couples are taken into account.

Note on the 2027 changes: The detail of how the new rules apply to each type of death benefit, including lump sums from DB schemes, should be checked against the final legislation and HMRC guidance. If you are concerned about inheritance tax and pensions, a regulated adviser can model your own position.

Death benefits: the nuance

Concern about death benefits, and passing money to children, is one of the reasons people most often give for looking at a transfer.

In David's example, the reality is more nuanced:

• His scheme includes a five-year guarantee: if he dies within five years of starting his pension, the remaining payments for that period are paid as a lump sum.
• After that, a 50% spouse's pension would continue for the rest of Sarah's life. Based on her age and life expectancy, that benefit might be worth something like £198,000 in actuarial terms in this example.
• A transferred SIPP can pass to children, but from April 2027 unused funds are due to come into the scope of inheritance tax, which narrows the advantage that people have often assumed a transfer gives.

What about flexibility?

This is the area where the case for a transfer has some genuine merit. David wants to be able to take more income in some years, perhaps for travel or a large purchase, and less in others. A fixed £22,000 a year from age 62 does not allow that.

In a case like this, a regulated adviser might typically look at a hybrid approach: keep the DB pension, and use the separate DC pot of £87,000 as the flexible part. In this example David could:

• Draw larger sums from the DC pot before the DB pension starts.
• Bridge the gap between stopping work at 59 and the DB pension starting at 62.
• Top up the guaranteed DB income with flexible DC withdrawals when needed.
• Use his ISA savings for extra tax-free flexibility.

This could give David much of what he wants without giving up a guaranteed, inflation-linked income that would be expensive to replace by buying a joint-life annuity on the open market.

Likely outcome of regulated advice

After a full assessment, the likely outcome of regulated advice in a case like David's would be: keep the defined benefit pension.

The main reasons an adviser might typically weigh:

1. David is in good health, so he is likely to receive his DB income for a long time.
2. The growth needed to match the DB benefits might be achievable in theory, but it carries real risk, and the analysis would need to show clearly that a transfer is in his best interests.
3. The guaranteed spouse's pension for Sarah is very valuable and would be expensive to replace with a joint-life annuity.
4. Most of his wish for flexibility could be met using the DC pot and ISAs, without any transfer.
5. His employer is long-established and the scheme well funded, so the risk of the scheme failing is low, and the PPF would usually pay compensation if it did.

Someone in David's position might find this hard to accept at first. A £480,000 CETV can feel like "money on the table". But the guaranteed income, with spouse's protection and inflation increases, could be worth more than the transfer value offered. Seen that way, the CETV is not a windfall.

Key lessons from this example

What this example illustrates

1. A high CETV multiple is not a reason to transfer. It reflects the value of the guarantee, not a bargain.
2. Flexibility can often be found without transferring. DC pots, ISAs and phased planning can sit alongside a DB income.
3. Death benefits need careful thought. Built-in spouse's pensions are often worth more than people assume.
4. The 2027 inheritance tax changes affect pots more directly than income. DB pensions are affected differently from DC pots, and the details matter.
5. Health matters. Every case depends on personal circumstances, including health and life expectancy.
6. The FCA's starting assumption is that a transfer is unlikely to be suitable for most people. An adviser must be able to show a transfer is in your best interests.

Are transfers ever suitable?

The FCA does not ban DB transfers, and its starting assumption can be departed from where an adviser can clearly show that a transfer is in someone's best interests. Factors such as serious ill health, personal circumstances, other secure income and the strength of the employer can all affect the analysis, but none of them on its own means a transfer is suitable. Most people are better off keeping their guaranteed income.

Every case needs a detailed, personal analysis from an FCA-authorised adviser with the pension transfer permission, not a rule of thumb or a comparison website.

What regulated advice involves

If your safeguarded benefits are worth more than £30,000, you must take regulated advice from a firm with the pension transfer permission before you can transfer. This is not a formality. It exists because DB transfers are irreversible decisions with serious long-term consequences.

Regulated advice should involve:

• An appropriate pension transfer analysis, including a transfer value comparator, following FCA rules.
• A full fact-find covering your wider finances, health, family and goals.
• A look at the alternatives before any conclusion that a transfer is suitable.
• A written suitability report explaining the recommendation and why.
• An adviser who appears on the FCA Register at a firm with the pension transfer permission, and who holds the required pension transfer qualification.

Since 1 October 2020, firms generally cannot charge contingent fees for DB transfer advice (fees payable only if you transfer), with limited exceptions for serious ill health and serious financial hardship.

For free, impartial guidance, contact MoneyHelper. Be wary of anyone who contacts you out of the blue about your pension, and check the FCA ScamSmart site before dealing with any firm.

If you would like to understand how DB transfers and the advice process work, you can book a free chat about how the process works. It is general information, not advice. You can find more illustrative examples in our case study section.

Frequently asked questions

Should I transfer my DB pension if I have a large CETV?

A large CETV is not a reason to transfer on its own. It reflects the value the scheme places on your guaranteed income. The key question is whether you need flexibility more than you need certainty. A regulated adviser's analysis will compare what you would give up with what you might gain. The FCA's starting assumption is that a transfer is unlikely to be suitable for most people.

What is an appropriate pension transfer analysis (APTA)?

An APTA is the analysis an adviser must carry out under FCA rules before giving advice on a DB transfer. It looks at your circumstances, objectives and alternatives, and includes a transfer value comparator (TVC) showing what it might cost to buy the same benefits elsewhere. Many advisers also show a required rate of return: the yearly growth a transferred fund would need to provide the same income.

Do I lose my spouse's pension if I transfer my DB pension?

Yes. The built-in spouse's pension, often 50% of your pension and payable for the rest of your spouse's life, is lost on a transfer. Instead, the transferred fund has to support both your income and, later, any provision for your spouse, which depends on how much is left. Many people undervalue this benefit.

How do the 2027 inheritance tax changes affect a DB pension transfer decision?

Unused pension funds and most death benefits are due to come into the scope of inheritance tax from 6 April 2027. This tends to affect pots, such as SIPPs and personal pensions, more directly than the income from a DB pension. A transfer to a SIPP may not avoid inheritance tax and could make more of your pension wealth part of your estate. The details should be checked against the final rules with a regulated adviser.

Is a DB pension transfer ever the right choice?

Sometimes, but rarely. The FCA's starting assumption is that a transfer is unlikely to be suitable for most people, and an adviser must be able to show that it is in your best interests. Every case has to be assessed individually by an FCA-authorised adviser with the pension transfer permission.

This is a hypothetical, illustrative example. The figures are examples only and are not a forecast. It is not financial advice and should not be relied on for any decision about your pension.