Case Study: Planning Retirement With Mixed DB and DC Pensions (2026)

This hypothetical case study illustrates how a 62-year-old with multiple pension pots might approach retirement planning with the help of a pension transfer specialist. All names and identifying details have been changed. Individual circumstances vary — always seek regulated financial advice before making pension decisions.

Margaret’s Pension Landscape

After a 30-year career spanning three different employers — a local council, an NHS trust, and a private healthcare company — Margaret found herself approaching retirement with a complicated patchwork of pension arrangements:

• Pension 1 — Local Government Pension Scheme (LGPS): A defined benefit (DB) scheme from 8 years of service. Projected annual income: approximately £4,200 per year from age 65.
• Pension 2 — NHS Pension Scheme: A further DB scheme from 12 years of service. Projected annual income: approximately £7,100 per year from age 65.
• Pension 3 — Private Company Defined Contribution (DC) Scheme: A pot accumulated during 10 years in the private sector. Fund value: approximately £68,000, invested in a default lifestyle fund.

On paper, Margaret appeared to be in a reasonable position. But she felt confused and overwhelmed. Three providers, three sets of annual statements, and no clear picture of what her combined retirement income would actually look like — or whether she was making the most of her options.

The Initial Consultation

Margaret booked a free 15-minute consultation with a pension transfer specialist to get clarity on her situation. During this initial call, several immediate observations emerged:

• Her two DB pensions (LGPS and NHS) carried substantial guaranteed income — important protections she would permanently give up if she transferred them out
• Her DC pot of £68,000 was invested in a default lifestyle fund that had been progressively de-risking — potentially too conservatively for her age and goals
• She had not reviewed the annual management charges on her DC pot, which were running at 0.95% per year — higher than modern low-cost alternatives
• She had no strategy for when and how to draw from each pot to manage her income tax position

It became clear that while consolidation of her two DB pensions was unlikely to be appropriate, there was significant scope to review her DC pot and build a holistic retirement income plan.

Key Decision: Should Margaret Transfer Her DB Pensions?

This is often the first question that comes to mind when people have DB pensions — could transferring out unlock more flexibility or a larger lump sum?

For Margaret, the analysis was clear: her DB pensions were highly valuable and transferring them was unlikely to be in her best interest. Here’s why:

The guaranteed annual income from Margaret’s DB pensions — approximately £11,300 combined — represented enormous security. If she were to purchase equivalent guaranteed income via an annuity at age 65, it would cost roughly £200,000–£250,000 or more at current annuity rates. Her Cash Equivalent Transfer Values (CETVs) would almost certainly not match that replacement cost.

Additionally, both the LGPS and NHS Pension Scheme offer:

• Inflation-linked increases in retirement (LGPS: CPI-capped; NHS: CPI)
• Survivor pensions for a spouse or dependant on death
• Guaranteed income regardless of investment market performance

Margaret’s adviser recommended leaving both DB schemes in place and instead focusing the planning work on her DC pot and overall income sequencing strategy.

What Happened With the DC Pot

The £68,000 DC pot offered the most scope for action. A full suitability review led to several recommendations that Margaret ultimately chose to explore:

1. Transfer to a Modern SIPP

Margaret’s existing DC scheme had limited fund options and a relatively high annual management charge of 0.95%. By transferring to a self-invested personal pension (SIPP) with a modern platform, she was able to access a wider range of funds with charges closer to 0.15–0.25% on the underlying investments — a meaningful difference over a multi-year retirement.

It’s worth noting that switching DC providers does involve costs and risks. Exit charges (if applicable), the period out of the market during transfer, and the importance of ensuring the new provider is FCA-authorised are all factors that need careful assessment.

2. Investment Strategy Review

Margaret’s default lifestyle fund had already moved heavily into cash and bonds ahead of an assumed annuity purchase — a strategy designed for when most people bought annuities on retirement. Since Margaret planned to use drawdown rather than an annuity, this defensive position was not well-suited to her actual goals.

Her adviser discussed the implications of remaining invested in growth assets for a longer period (she could potentially spend 25–30 years in retirement), and how a diversified fund approach might better serve her long-term needs.

3. Tax-Free Cash Planning

Under current rules, Margaret could access up to 25% of her DC pot as a Pension Commencement Lump Sum (PCLS) — tax-free, subject to the Lump Sum Allowance (LSA) of £268,275 introduced after the Lifetime Allowance was abolished in April 2024. From her £68,000 DC pot alone, that represented approximately £17,000 of tax-free cash.

Separately, each of her DB pensions also allows her to commute some pension income for a tax-free lump sum at retirement — governed by the scheme commutation factors.

The combined tax-free cash available across all three schemes could be substantial. However, taking maximum tax-free cash isn’t always optimal — it reduces future income. Margaret’s adviser helped her model different scenarios to find the right balance.

Retirement Income Sequencing

One of the most valuable aspects of Margaret’s financial planning process was developing a clear income sequencing strategy — deciding which pots to draw from, and when.

A possible approach (illustrative only — individual circumstances vary):

1. Ages 62–65 (pre-State Pension, pre-DB income): Draw lightly from the SIPP. Keep withdrawals within the personal allowance (£12,570) where possible to avoid income tax.
2. Age 65: DB pensions commence, providing approximately £11,300 of guaranteed income per year. Combined with the State Pension (accessible from age 67 for Margaret’s age group), total guaranteed income could exceed £22,000 per year.
3. Age 67+: Full State Pension adds to guaranteed income base. SIPP can be drawn more flexibly as a supplement, or preserved as a tax-efficient estate planning vehicle.

Lessons From Margaret’s Case

Margaret’s situation highlights several planning principles that many people with mixed pension portfolios encounter:

DB Pensions Are Usually Worth Keeping

The guaranteed income, inflation linking, and survivor benefits built into most DB schemes are extremely difficult and expensive to replicate in the open market. In the vast majority of cases, the FCA’s presumption against transferring DB pensions reflects the financial reality.

DC Pots Deserve Regular Review

Default investment strategies, charges, and provider quality should be reviewed periodically. A pot that was appropriate when opened in 2010 may no longer be the best option in 2026.

Income Sequencing Matters

Drawing from the right pots in the right order can significantly reduce lifetime tax bills. This is one of the key areas where professional advice adds tangible value.

The Whole Picture Matters

Pension decisions don’t exist in isolation. State Pension entitlement, potential inheritance tax implications, health, family circumstances, and attitudes to risk all feed into a comprehensive retirement plan.

Finding a Pension Transfer Specialist

If you have a mix of DB and DC pension arrangements and are approaching retirement, working with a qualified pension transfer specialist can bring significant clarity and value. Under FCA rules, anyone advising on the transfer of a defined benefit pension must hold specific qualifications — the FCA’s Register (fca.org.uk/register) allows you to verify any adviser’s credentials.

Key questions to ask when choosing a pension transfer specialist:

• Are you FCA-authorised and qualified to advise on defined benefit pension transfers?
• Do you provide a written Suitability Report for all recommendations?
• How are your fees structured?
• Can you review all my pensions and give me a holistic picture?

Seeking Professional Advice

This case study is a hypothetical illustration only. It is not financial advice, and the figures used are for illustrative purposes. Every individual’s pension situation is different, and decisions about transferring pensions, consolidating pots, or drawing income must be based on a detailed assessment of personal circumstances.

If you have a defined benefit pension and are considering your options, you are legally required to take regulated financial advice before transferring if your CETV is £30,000 or more.