Transferring your pension

It is possible to transfer your defined benefit (DB) pension. If you are approaching retirement and are ready to access your benefits, your options are to either:

  • take your DB pension or
  • transfer your DB pension out of the scheme

You can choose to transfer all of your benefits or just any Additional Voluntary Contributions (AVCs), as long as it’s in line with the rules for your specific pension section.  Please see our read as you need guide here for more details. 

Transferring your pension does, however, carry significant risks. You should carefully compare the benefits of your current pension with any alternatives before making a decision.

If you’re currently paying into the Fund and want to transfer into or out of it but aren’t yet ready to take your benefits, you can find more information here.

The risks of transferring your DB pension

The main benefit of your defined benefit pension is that it will pay you a regular income until you die – no matter how long you live – as well as a regular income to a surviving spouse or dependant. By giving this up now, you’re trading a guaranteed income for life, for a sum of money that could run out, leaving you with nothing. 

If you transfer from a DB scheme to a defined contribution (DC) arrangement, you:

  • lose the guaranteed income for life for you and your dependents in your current scheme  
  • may see the value of your pension pot go down, as well as up 
  • may have less income in retirement, particularly if the value of your pension pot falls
  • may have to pay management fees to your pension provider
  • may run out of money in your lifetime

Watch the short video below to learn more...

For these reasons, the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) both believe that it will be in most people’s best interests not to transfer their DB pension. You can read more about when a transfer may or may not be suitable on the FCA’s website here.

You must provide documents or ‘evidence’ that the scheme you want to transfer to is suitable and secure. The government introduced these rules in November 2021 to help protect members from unsuitable or insecure transfers. You can find out more here.

Why you might consider transferring your pension

You may be thinking of transferring from a DB scheme to a DC scheme to get more choice around how, and when, to take your pension benefits.

Transferring your defined benefits out of the Fund, to have direct access to your money, may not produce the best retirement outcome for most members. But for some members, it could. 

You should think carefully about the benefits you’d be giving up if you went ahead with it. You should consider speaking to an independent financial adviser before making any decisions (see ‘The importance of getting advice’ section below).

Transferring from your defined benefit pension might not be a bad idea if…

  • You have enough money from other sources to fund a good, guaranteed retirement lifestyle. For most of us, though, without that additional financial buffer, we’d struggle to achieve our retirement goals.
  • In exceptional circumstances like extreme ill-health, transferring your defined benefit pension may mean you can leave a larger pot of money behind in the event of your death.

With a DC arrangement you can usually take your pension pot from age 55 and can then:

  • leave it invested until you need it. This is allowed up to the age of 75
  • get a flexible income, taking it a bit at a time. This is known as drawdown 
  • get a regular, secure income, known as an annuity
  • take all of the money as a cash lump sum.  We call this total encashment
  • take the money in your PRA as several smaller lump sums
  • mix and match your options with a combination of the above

This broader range of options for DC schemes was introduced as part of the Government’s ‘pension freedoms’ in 2015. 

If you’re transferring out to access your money earlier, remember that only the first 25% is tax-free. So you’ll have to pay tax on 75% of the fund when you take your benefits. 

If you decide that transferring to a DC arrangement is right for you and you are interested in drawdown, the Trustee of the Fund has appointed Legal and General Investment Management (LGIM) to offer members access to a drawdown facility. You can find out more about how it works here.

Guidance on your defined contribution transfer and retirement options

If you’re aged 50 or over and request to transfer out or take any defined contribution benefits, such as BRASS or AVC Extra, you may need to obtain free guidance on your retirement options from Pension Wise before we can go ahead with your application. 

You can learn more on the Guidance on your transfer and retirement options page.

The importance of getting advice

Transferring your pension is a big decision and one that may benefit from independent financial advice. 

You might have to do this by law if the value of your DB benefits is more than £30,000 and you are looking to transfer to a Defined Contribution/Personal Pension Arrangement.

But it could still be beneficial to obtain advice even if you pot is worth less than that.

The same applies if you have a DC pension pot (which contains a guarantee of the benefit you may get – known as safeguarded benefits).

Liverpool Victoria (LV) has been chosen as the official partner to give Fund members access to financial advice. LV can be contacted on 0800 023 4187.  You can find out more about the advice service here.

You are still free to choose your own Independent Financial Adviser (IFA). You can find an IFA in your area at

Watch out for scams

Pension transfers are one of the main routes being used by pension scammers.

Their tactics include:

  • contacting people out of the blue wanting to discuss their pension
  • offering ‘free pension reviews’
  • promising better returns on your savings
  • offering upfront cash or other incentives to transfer  

If you fall prey to these fraudsters, you could lose your entire pension savings and be asked to pay a large tax bill too. 

You can find out more on our scams page here or via The Pension Regulator’s (TPR) website here.  

How to make a transfer

We recommend that you read and consider all available guidance before proceeding with a request to transfer your pension.

If you are considering transferring your pension then you may benefit from financial advice. You might also have to do this by law if the value of your DB benefits is more than £30,000 and you are looking to transfer to a Defined Contribution/Personal Pension Arrangement.

You can read more about getting advice  here or check the FCA website for more details.

In November 2021, the government introduced new regulations to protect pension scheme members against unwise or illegal transfers. 

The new regulations help to protect you from scams. Depending on the type of the scheme you want to transfer to, you may need to provide ‘evidence’ or information to help us work out how safe the transfer is. Trustees can refuse transfers where there's a greater risk it may be part of a scam. You can learn more about what we need here

If you do decide to transfer out of your DB pension scheme, then the process will be as follows:

  1. Tell your employer that you want to opt out of your DB pension scheme.  This is important because a transfer can only be made once you have opted out and ‘preserved’ your benefits. It cannot happen if you are still actively paying in.
  2. Your employer will confirm your request to opt out with the Scheme administrator, Railpen.
  3. You will receive a preserved statement, showing the current value of your pension benefits. The Trustee will convert the benefits you’ve built up into a cash sum. This is known as the ‘transfer value’ or sometimes the ‘cash-equivalent transfer value’ or ‘CETV. This reflects the value placed on your benefits that would ultimately be transferred to a new arrangement.
  4. You decide on a new arrangement, to access options such as annuity or drawdown, and put that in place by applying directly to your chosen provider.
  5. Once the new arrangement is in place you apply to transfer out by returning all the necessary paperwork and documents (or ‘evidence’) to Railpen.
  6. Railpen will then disinvest your pension and transfer the funds directly to your new provider. Once complete, this transfer is permanent and cannot be reversed at a later date.