Case Study: Pharmaceutical Industry DB Pension Transfer, Should Rachel Take Her £225,000 CETV? (2026 Guide)

For someone like Rachel, in good health, with a secure deferred DB pension, flexible savings alongside it and a husband who would rely on her spouse's pension, a regulated adviser would be likely to conclude that she should keep her DB pension rather than take a £225,000 transfer value. The guaranteed, inflation-linked income would be hard and costly to replace from a pot of that size. This illustrative example explains what an adviser would typically weigh.

Quick summary

• Illustrative example: Rachel, 59, former quality assurance manager at a UK pharmaceutical manufacturer (a hypothetical person)
• Scheme: Private sector final salary (defined benefit) scheme, 25 years' service
• CETV offered: £225,000
• Scheme pension: £10,800 a year from age 65
• Likely outcome of regulated advice: keep the DB pension, because the guaranteed income is too valuable to give up

Background

Illustrative example: Rachel is 59 and lives in Cheshire with her husband, who still works part-time. She spent 25 years as a quality assurance manager at a large UK pharmaceutical manufacturer before taking voluntary redundancy at 54. Since then, she has worked two days a week as a freelance compliance consultant and paid into a small personal pension.

Her former employer runs a traditional final salary (defined benefit) scheme, now closed to new members. When she left at 54, she became a deferred member. Her pension is due to start at 65, when she would receive £10,800 a year, increasing each year in line with CPI up to 5%.

With retirement getting closer, Rachel receives a Cash Equivalent Transfer Value (CETV) statement from the scheme trustees: £225,000. Her question is a simple one: "Should I take the transfer value and manage the money myself?"

Rachel's full financial picture

Before anyone could assess a transfer, they would need a complete picture of Rachel's assets and income:

• Deferred DB pension: £10,800 a year from age 65 (CETV £225,000)
• Personal pension (SIPP): £48,000, built up since her redundancy
• ISA savings: £42,000
• State Pension: Rachel has 35 or more qualifying years, so she is on track for the full new State Pension from 67. The full rate is £241.30 a week (about £12,548 a year) in 2026/27
• Husband's pensions: her husband receives a small private pension of £6,400 a year and will reach State Pension age at 67
• Property: a mortgage-free home in Cheshire

Key point: Rachel's CETV of £225,000 is well above £30,000. By law, she must take regulated advice from an FCA-authorised adviser with the pension transfer permission before she can transfer. The FCA's starting assumption is that a transfer is unlikely to be suitable for most people.

What the transfer analysis might show

A regulated adviser must carry out an Appropriate Pension Transfer Analysis (APTA) and show a Transfer Value Comparator (TVC), which compares the CETV with an estimate of what it would cost to buy the same benefits in a DC arrangement. Advisers may also look at the investment return a transferred pot would need to achieve to match the DB income, sometimes known as the critical yield.

For illustration, suppose Rachel's transferred pot would need to grow by around 6.3% a year, after charges, to provide the same £10,800 a year from 65, rising with inflation.

In plain English: if Rachel moved £225,000 into a SIPP, she would need it to grow by around 6.3% every year, after fees, just to match what her scheme already promises.

Important: Achieving 6.3% a year after charges, consistently, over the six years to 65 and then throughout retirement, is not a safe planning assumption for a cautious to moderate investor. Markets can fall sharply, and at 59 Rachel has limited time to recover from a major fall before she needs the income.

What her retirement could look like without transferring

Without a transfer, Rachel's plans could look like this:

• Ages 59 to 65: Rachel continues her part-time freelance work and, if needed, draws gradually from her SIPP (£48,000) and ISA. There is no pressing need to take the DB pension early.
• Age 65: her DB pension starts at £10,800 a year, increasing with inflation. With her husband's part-time earnings and £6,400 pension, household income could cover their costs.
• Age 67: both Rachel and her husband receive their State Pensions. With Rachel's full State Pension, total household income could be in the region of £36,000 to £40,000 a year, depending on her husband's State Pension and whether he is still working, which would cover their modest lifestyle.

You can check your own State Pension forecast on gov.uk.

The spouse's pension

Rachel's DB scheme includes an important protection for her husband: a 50% spouse's pension. If Rachel dies first, he would receive £5,400 a year for the rest of his life, increasing with inflation.

If Rachel transferred to a SIPP, that guarantee would disappear. Instead, her husband could inherit whatever was left in the SIPP, but only if there was money left. If Rachel had drawn heavily from it, or markets had fallen, he could be left with far less than the scheme would have paid.

Tax-free cash without a transfer

Rachel's scheme lets her give up some of her pension in exchange for a tax-free lump sum at retirement. In this example, the scheme's commutation rate is 14:1, meaning each £1 a year of pension given up buys £14 of tax-free cash. She could take about £37,800 tax-free, reducing her pension to about £8,100 a year.

This could be useful if Rachel wants a lump sum at 65, perhaps to help a child with a home or to pay for a large expense. It does not need a transfer; it is available within the scheme.

Key point: The Lump Sum Allowance (LSA), the usual limit on tax-free cash across all pensions, is £268,275 following the abolition of the Lifetime Allowance from 6 April 2024. Rachel's projected tax-free cash is well within that limit, so there is no tax reason for her to transfer.

The 2027 inheritance tax changes

Some people used to consider transferring a DB pension to a SIPP because unused pension pots were usually outside the estate for inheritance tax. From 6 April 2027, unused pension funds and most death benefits are due to come into the scope of inheritance tax. That weakens one of the old arguments for a transfer. In Rachel's case, with modest savings, inheritance tax is not a driving factor anyway. The detail depends on the final legislation, so check the latest position on gov.uk and see our 2027 pension IHT guide.

What a regulated adviser might weigh

In a case like Rachel's, a regulated adviser would typically weigh:

1. The return needed: an illustrative 6.3% a year after charges is a demanding target, especially in the years just before retirement.
2. The value of guaranteed income: £10,800 a year, increasing with inflation, for life and regardless of markets, would be very hard to replace from a £225,000 pot.
3. The spouse's pension: losing the 50% spouse's pension would leave her husband exposed if Rachel died first.
4. Rachel's existing flexible savings: her SIPP (£48,000) and ISA (£42,000) already give her flexibility, so she doesn't need more of her wealth in drawdown.
5. Her circumstances: Rachel is in good health and has no pressing need for capital and no complex estate planning needs that would outweigh the scheme's benefits.

Likely outcome of regulated advice: keep the deferred DB pension and don't transfer.

Key lessons from Rachel's example

Rachel's situation is typical of many deferred members of private sector final salary schemes approaching retirement. The main points are:

• A large CETV does not automatically mean a transfer is right; what the money would need to achieve, and what you would give up, matter more.
• A guaranteed, inflation-linked income is valuable and hard to replace.
• Many people already have some flexible savings, such as ISAs or DC pensions, that can give them adaptability without giving up the DB guarantee.
• Regulated advice is a legal requirement where DB benefits are worth more than £30,000, which protects you from making an irreversible decision without proper analysis.

Getting help

Every pension decision is different. Rachel's example shows why it is important to look at the whole picture, not just the CETV. A £225,000 figure can look attractive, but when you look at what it would need to deliver, and what you would give up, a transfer is often hard to justify.

If you have a deferred DB pension and are wondering whether to transfer, regulated advice from an FCA-authorised adviser with the pension transfer permission is required where your benefits are worth more than £30,000. Free, impartial guidance is available from MoneyHelper, and Pension Wise offers free appointments about DC pension options for people aged 50 or over. Be wary of unexpected contact about your pension; see the FCA's ScamSmart guidance.

I don't give pension transfer advice. I offer a free, no-obligation chat that gives general information about how DB transfers and the advice process work, and if you want regulated advice I can introduce you to an FCA-authorised firm that holds the pension transfer permission. Arthur Browns may receive a fee from the firm we introduce you to if you become their client. Introductions are for transfer values of £50,000 or more. You can book a free chat about how the process works or read more case studies.

This is a hypothetical, illustrative example for education only. Rachel is not a real person, and the figures are examples only. It is not personal financial advice. Any pension transfer must be assessed on your own circumstances by a regulated adviser.