Nigel Chambers: When transferring out of a DB scheme can be a good idea

Pension freedom should apply equally to all

clock • 3 min read

Transferring out of a defined benefit scheme can be a prudent course of action for many more people than is widely thought, argues Nigel Chambers, so why is this option so rarely considered?

Pension schemes that provide an income based on final salary have long been held out as the gold standard of retirement provision and indeed, if the person lives a very long time - beyond their life expectancy - they will provide a very high total return. Defined benefit (DB) schemes are, however, also inflexible - simply allowing a person to take an initial tax-free lump sum and then providing a fixed income each year, increasing in line with inflation. Should the scheme fall into default - recent high-profile examples being BHS, British Steel and turkey firm Bernard Matthews - the safe...

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