Defined benefit transfer values: how they work and what's good

A pension transfer value is the cash a defined benefit scheme would pay out in exchange for your promised income; on its own it cannot show if it is good.

If a scheme has sent you a pension transfer value and you want to know how it was worked out and whether it is a good one, this guide sets out what the law and the regulators say. An FCA-authorised adviser can read a statement against the rest of your retirement income and your family's needs; to ask for that, there is the form on this page (no charge). Nothing here is a recommendation to transfer or to stay.

What a pension transfer value is

The term most schemes use is a cash equivalent transfer value, or CETV. The Pensions Regulator, which regulates workplace schemes, puts it briefly: "A CETV represents the expected cost of providing the member's benefits within the scheme." It is the lump sum the scheme would send to another pension in return for you giving up what it has promised you. What those promises are, and how a final salary pension pays out, is covered in final salary pensions.

The right comes from the Pension Schemes Act 1993. Section 93A says the trustees or managers "must, on the application of any member, provide the member with a statement of entitlement in respect of the member's transferrable rights in relation to categories of benefits other than money purchase benefits." The statement is "a written statement of the amount of the cash equivalent at the guarantee date" of those rights. Section 94 then gives the member who has received it a right to take "the cash equivalent shown in that statement". MoneyHelper describes the practical side: you ask your existing provider for a CETV, and it is "how much the new scheme would receive."

Two limits are worth knowing. MoneyHelper says you often cannot transfer away within a year of your normal retirement date or after your pension has started paying out; for benefits that are not flexible, section 95 sets the deadline for the written application "by no later than the date that falls one year before the member attains normal pension age". It also says most public sector pension schemes will not allow a transfer to a defined contribution arrangement, so a CETV from one of them may be of little use for a move to a SIPP; see SIPPs for what that destination is.

How a scheme works out the figure

A general calculator cannot give your number, because the trustees set the assumptions behind it. For benefits linked to salary, regulation 7A of the Transfer Values Regulations 1996 says the figure is "calculated— (a) on an actuarial basis" and is "the amount at the guarantee date which is required to make provision within the scheme for a member’s accrued benefits, options and discretionary benefits." Regulation 7B then says that, "Having taken the advice of the actuary, the trustees must determine the economic, financial and demographic assumptions", with the aim that they lead to "the best estimate" of the figure. Public service schemes are the exception for discount rates, which follow guidance "prepared, and from time to time revised, by the Treasury".

The Pensions Regulator's guidance for trustees of private sector schemes, issued in September 2008 for the rules that took effect that October and still on its website, explains how the pieces fit. For defined benefits, the CETV "is a value determined on actuarial principles, which requires assumptions to be made about the future course of events affecting the scheme and the member's benefits." Trustees "must have regard to their investment strategy when choosing assumptions", and will generally need to build in "some form of current market indices or other indicators" so the figure keeps pace with "normal market movements". Where a member can retire early without anyone's consent and the early retirement terms add value, the guidance says "the legislation requires the trustees to include an allowance for early retirement". What a deferred pension is and how it grows is in deferred final salary pensions.

The figure can also be lower or higher than that best estimate. Regulation 7D says an initial cash equivalent "may, or as the case may be must, be reduced in accordance with Schedule 1A". TPR's guidance says trustees "are permitted to offer transfer values which are less than the ICE under the best estimate method", the initial cash equivalent, and that "One of the permitted reductions is to allow for the funding situation of the scheme." The guidance adds that trustees "are not obliged to do so". The guidance also says "the legislation sets a floor on transfer values, it also provides a basis for paying higher amounts." If your figure looks different from what you expected, ask the scheme which basis it used.

The statement, the guarantee date and how long a figure lasts

The "guarantee date" in section 93A is, in the Act's words, "the date by reference to which the value of the cash equivalent is calculated." Regulation 6 of the 1996 Regulations sets when it falls: "within the period of three months beginning with the date of the member’s application", or, where the trustees cannot manage that for reasons beyond their control, within a longer period "not exceeding six months". The guarantee date must also fall "within the period of ten days (excluding Saturdays, Sundays, Christmas Day, New Year’s Day and Good Friday) ending with the date on which the statement of entitlement is provided to the member", so the figure is calculated shortly before the statement is sent. Section 95 of the Act then gives you "the period of 3 months beginning with the guarantee date" to make a written application to use it.

Three consequences follow, each from the sources above:

• A request is limited. Regulation 6 says a member "may not within a period of twelve months beginning on the date of that application make any further such application unless the rules of the scheme provide otherwise or the trustees allow the member to do so." MoneyHelper warns that a second request within the year may carry a charge. Ask the scheme what its own rules say before you request a second one.
• Time can run out. MoneyHelper says that if your CETV is over three months old you need a new one, and that if the value has changed and advice is needed, the adviser will usually need to check that the recommendations still apply to the new figures, which is why it suggests finding an adviser before requesting a CETV.
• The figure is not unconditional. Regulation 9 says that where a scheme "has on or after the guarantee date begun to be wound up", the figure may be reduced "to the extent necessary for the scheme to comply with" the winding-up rules.

The practical steps, forms and timings of a move are in how to transfer a pension, and what a transfer can cost is in pension transfer fees.

Why the number moves, and why it cannot tell you if it is good

Two requests can return different figures. The trustees choose the assumptions, they are expected to reflect "normal market movements", the scheme's funding can lead to a reduction, and a different date means a different calculation. If your figure has fallen, the useful question for the scheme is which assumption or reduction changed. The same applies in the other direction, and neither a fall nor a rise says whether to transfer.

The FCA is plain about a high figure. In its guidance to advisers, FG21/3 (March 2021), it says "Wanting to take advantage of a high transfer value is not generally a good reason on its own to transfer." It lists, among poor practice, firms that "imply that the higher the transfer value, the more likely it is that a transfer will be suitable". And it describes the way many people see the figure: "Many consumers struggle to understand the underlying cost of a guaranteed income and some may even regard the CETV as more like a lottery win."

The transfer value comparator

Advisers giving full advice on a transfer must put the figure in context. The FCA's rule, COBS 19.1.3A, says a firm must compare "the transfer value offered by the ceding arrangement with the estimated value needed today to purchase the future income benefits available under the ceding arrangement using a pension annuity". The regulator's guidance describes the result, the transfer value comparator (TVC), as comparing the transfer value with "the estimated cost of buying the DB scheme benefits on a risk-free basis in a DC scheme", and says "The purpose of the TVC is to give some context to the cash equivalent transfer value (CETV)." The assumptions used "vary from month to month", so a comparator is correct for the date it was prepared. It is a comparison with the cost of replacing the income, not a verdict on what suits you; a pension annuity is explained in pension annuities.

Beyond that context, what the regulators set out is a starting position. The FCA and The Pensions Regulator "believe it’s in most people’s best interests to keep their DB pension. You can’t reverse a transfer, so you need to make sure you understand the risks so you can make an informed decision." Top of the losses the FCA names for anyone moving into a defined contribution pot is the scheme's income guaranteed for life, for the member and their dependants. The weighing is in should I transfer my final salary pension?, and a side-by-side of the two kinds of pension is in is a final salary pension better?. A defined contribution pot is invested: its value can fall as well as rise, and you may get back less than was paid in.

The £30,000 advice threshold and the value it uses

The transfer value also decides whether the law requires a check on advice. Regulation 5 of SI 2015/742 says the trustees or managers "are not required to carry out the check in section 48(1) of the Act if the transfer value" of the safeguarded benefits "is £30,000 or less on the valuation date". The regulation measures that value as the cash equivalent calculated under section 97 of the 1993 Act, "but, in each case, disregarding regulations 7D (reductions to initial cash equivalents) and 7E". In plain terms, the test uses the figure before any cut for the scheme's funding, so a statement reduced for underfunding to below £30,000 does not by itself take a member under the threshold. Ask the scheme which figure it applied. Who must give that advice, and what it involves, is covered in the advice requirement for defined benefit transfers; the FCA's rules tell the adviser to "start by assuming that a transfer, conversion or opt-out will not be suitable".

Already holding a CETV? Name the scheme and the statement date in the form on this page. The FCA-authorised adviser who replies can begin from your statement. The conversation is about your position, not about arranging a transfer, and any advice on a defined benefit pension has to meet the rules above.

An unexpected offer to help with a transfer is a warning sign: the FCA's pension scams page lists what to look for, and how pension scams work and how to transfer a pension cover the checks a scheme makes before paying out.

Questions about transfer values

Why has my defined benefit transfer value gone down?

It may be the assumptions the trustees chose, a reduction for the scheme's funding position, or a new calculation date. Ask the scheme in writing what changed. A lower figure does not by itself say anything about your promised pension; see can a final salary pension go down?

Will transfer values go up again?

Nobody can promise that. Trustees recalculate with assumptions meant to follow normal market movements, so the next statement can be higher or lower. And as the FCA's guidance quoted above says, a high figure is not on its own a reason to move.

How do I get a transfer value quote?

Ask the scheme for a statement of entitlement; section 93A obliges the trustees or managers to provide one when a member applies. Regulation 6 entitles you to one such statement in twelve months unless the scheme's rules or the trustees allow more, so it can be worth timing the request.

Can I transfer a small defined benefit pension?

Whether a scheme allows it depends on the scheme. At £30,000 or less, regulation 5 says the trustees need not check that you took advice, but the FCA's page says "You should get financial advice if you're considering a transfer." The FCA and TPR's starting view applies at any size.

Can I move a defined benefit pension into a SIPP?

Many defined benefit schemes allow transfers out, but not all do, and most public sector schemes will not allow a transfer to a defined contribution arrangement, according to MoneyHelper. If yours does, the same advice rules apply; see SIPPs and how to transfer a pension.

If a question about your own statement is still open, put it on the form on this page with the scheme's name.

Sources, checked 18 October 2026: Pension Schemes Act 1993, sections 93A, 94 and 95; Occupational Pension Schemes (Transfer Values) Regulations 1996, regulations 6, 7A, 7B, 7D and 9; SI 2015/742, regulation 5; The Pensions Regulator, Transfer values guidance (September 2008); FCA Handbook, COBS 19.1; FCA, FG21/3 Advising on pension transfers (March 2021); FCA, Considering a defined benefit pension transfer; MoneyHelper, How to transfer out of a defined benefit pension (archived copy, 9 July 2026).