Can I transfer out of a UK defined benefit pension scheme to a personal pension?
Whether or not you can transfer out of a UK defined benefit pension to a personal pension, either in the UK or abroad, will first depend upon whether it is a private sector defined benefit scheme or a public sector defined benefit scheme.
If it is a private sector defined benefit scheme you can undertake a transfer out, subject to certain requirements detailed below. However, since the introduction of the new UK pension freedoms in April 2015, the UK government banned any transfer out from unfunded public sector defined benefit schemes to defined contribution pensions. Examples of unfunded public sector schemes include the NHS Pension and Teachers Pension.
Transfers out of funded public sector schemes (like the Local Government Pension Scheme) and private sector defined benefit schemes to a personal pension are, however, still permitted providing you receive the required financial advice from a UK regulated pension transfer specialist. The requirement for specialist UK financial advice is irrespective of the fact that you are an expatriate living outside of the UK. The only exception to the advice requirement is where your defined benefit pension has a CETV (also known as a ‘cash-equivalent transfer value’) of £30,000 or less.
Deciding whether to transfer your benefits out of a defined benefit pension to a personal pension is a very important decision which will affect the rest of your life. The required specialist UK financial advice will, amongst other things, compare the benefits being given up from your defined benefit pension with those that could be offered by the new proposed pension plan. While transferring benefits from a defined benefit scheme to a personal plan can be the right outcome for some people, it is not appropriate for everyone. Don’t only look at the size of your transfer value, you must weigh up your options and reach the decision that is right for you. This includes considering how you will afford retirement and achieve your retirement income goals.
In order to assist our clients to meet the UK requirement for specialist UK financial advice, Florin Pensions works with an appropriately qualified UK independent financial adviser to prepare Suitability Reports for you taking into consideration your specific circumstances as an expatriate residing in the US.