What is a Defined Benefit Pension Transfer?
What is a Defined Benefit Pension?
A Defined Benefit (DB) Pension Scheme, is a scheme were you are paid based upon how many years in service you have worked for the employer for in conjunction to the salary you earned.
Defined benefit pensions have historically been provided by both private companies and public sector organisations. Although it is said that final salary pensions are in decline, millions of people still hold them according to which.com. As stated by the Office for National Statistics, 1.3m people are actively contributing, and 11.8m have a DB pension they will be able to claim in future.
Who is eligible for a DB Pension?
Those who work in a public sector or within any of the services below, will be entitled to join a Defined Benefit pension scheme.
- Civil service
- Armed Forces
- Fire brigade, etc
How do DB Pension Schemes work?
The employer in question will contribute to the scheme and is responsible for ensuring the value upon retirement is sufficient. A DB scheme will pay out to the scheme holder annually once retired and is classed as a secure income which increases each year.
Benefits of DB Pension Schemes
A DB pension scheme also come with additional benefits which other schemes may not offer, therefore it is strongly advised to research or to seek financial advice you you were thinking to transfer your pension scheme, as you could lose out on these benefits upon transfer.
DB benefits include:
- Death in service – Payments will revert to spouses, partner or dependents if the policy holder dies before reaching the pensionable age.
- You will receive your pension in full if you must retire earlier than the pensionable age due to ill health.
- A reduced annual pension rate if the policy holder retires earlier than the pensionable age.
- In some occasions certain DB schemes will also pay your spouse a pension too
DB Transfers – What to look out for
Negligent advice from financial advisors can lead to costly outcomes. Advice to transfer the Defined Benefit Pension Scheme into a different Pension Policy can lead to the following:
- You may suffer financial loss due to the transfer.
- You may have transferred into a high risk investment – Which has or could subsequently fail. Causing you to lose your pension.
- You would have lost out on the additional benefits you would have been entitled to, if you had of maintained the Defined Benefit Scheme.
If you have transferred your pension into another scheme in the last 6 years, we may be able to help you recover those losses.
Next steps to begin recovery:
- Contact us – We will discuss your pension history and your current situation.
- We will request DSARs from the original pension provider and current provider.
- We will then be able to establish what losses have occurred as a result of the transfer.
- This will allow us to proceed with a claim on your behalf as your solicitor.
We want to ensure that we can help those who have been given negligent pension transfer advice.