Staying in a defined benefit scheme is not risk-free.
If your employer is still in business, it usually has to make sure the scheme has enough funds to provide the full entitlement to members.
But some employers sponsoring these defined benefit schemes have gone bust, not leaving enough money to pay the pensions promised.
If an employer is going out of business without enough funds in its pension scheme, the Pension Protection Fund might be able provide compensation, but this might not be the full amount of the pension you’ve accumulated.
If the value of your defined benefit scheme is £30,000 or above, you will have to take advice from a regulated financial adviser before you can transfer. This rule is there to protect you and make sure you’re aware of all the pros and cons of transferring.
Even if the value of your scheme is below £30,000, it’s still a good idea to take advice, unless you’re absolutely sure this is what you want to do and understand the consequences.
If you do take regulated advice and things go wrong, or it ends up being the wrong choice for you, you’ll be able to use the complaints and compensation schemes available.
When you ask your pension scheme trustees about pension transfers, the information you get will be about pension transfers in general and won’t be specific to your needs and circumstances.
Firms advising on transferring your defined benefit pension to a defined contribution pension must have specialist knowledge in this area.
Make sure you ask them if they’re qualified in this field.
Clifford Osborne are Independent Financial Advisors (IFA) based in Eastbourne, East Sussex, offering pension planning advice, mortgage advice and more. You can read our VoucherFor reviews here. Our clients often come from Uckfield, Lewes, Brighton, Tunbridge Wells, Hastings, Bexhill, Newhaven, Seaford, Crowborough and further afield.