CETV Explained: Should You Transfer a Defined Benefit Pension in 2026?

What Is a CETV?

If you have a defined benefit (final salary or career average) pension from a current or former employer, the scheme guarantees you an income for life from retirement, usually with some inflation protection and often a spouse's or dependant's pension if you die. A Cash Equivalent Transfer Value, or CETV, is the capital sum the scheme calculates it would need to pay into a defined contribution arrangement to compensate you for giving up that guarantee.

It is not a fixed, published figure — it changes based on actuarial assumptions (life expectancy, discount rates, expected investment returns) and can rise or fall significantly between requests, sometimes by tens of thousands of pounds within a year, largely driven by movements in long-term interest rates and gilt yields.

Why the £30,000 Advice Requirement Exists

Since 2015, UK pension freedoms have made defined contribution pots far more flexible — accessible from age 55 (rising to 57 in April 2028), with full control over drawdown and death benefits. This flexibility created a strong financial incentive for pension providers and some advisers to encourage transfers out of defined benefit schemes, which in many cases was not in the member's interest.

In response, the FCA requires that any transfer from a safeguarded (broadly, defined benefit) pension worth £30,000 or more must be preceded by advice from a suitably qualified, FCA-regulated pension transfer specialist. The scheme's trustees cannot legally process the transfer without evidence this advice was obtained — even if the member's final decision goes against the adviser's recommendation.

What a CETV Multiple Tells You

A common shorthand is to express the CETV as a multiple of the annual pension it replaces:

Higher multiples generally appear when interest rates and gilt yields are low, because a larger lump sum is needed to generate the same guaranteed income using more conservative investment return assumptions. When rates rise, CETV multiples typically fall — timing matters, but chasing a "good" multiple should never be the sole reason to transfer.

The Case Against Transferring

For most people, a defined benefit pension is one of the few remaining sources of guaranteed, often inflation-linked income for life — akin to an annuity that also covers a spouse or dependant, without you having to manage investment risk. Replacing this privately through a DC drawdown pot means:

• You bear investment and longevity risk — if you live longer than expected or markets underperform, the pot could run out
• You need to manage withdrawals carefully to avoid running down capital too fast
• Spouse/dependant protection is not automatic — it depends on how you structure the DC pot and nominate beneficiaries

When a Transfer Might Make Sense

There are legitimate scenarios where transferring can be the right call for a specific individual, always following regulated advice:

• Reduced life expectancy due to serious illness, where the guaranteed income for life is worth much less in practice
• No dependants who would benefit from a spouse's or dependant's pension, removing one of the main value drivers of staying in the DB scheme
• Strong estate-planning priority — DC pots can generally be passed to beneficiaries more flexibly on death (particularly if you die before age 75) than most DB scheme death benefits
• Very high transfer multiples combined with a genuine, advised need for flexibility, not simply "the number looks big"

What to Do Next

1. Request a CETV from your scheme (usually free once every 12 months, a fee may apply for more frequent requests).
2. If the value is £30,000 or more and you're considering transferring, you must see a regulated pension transfer specialist — search the FCA register to confirm they hold the correct permissions.
3. Bring full details of your health, dependants, other pensions, and retirement goals to the advice meeting — a transfer recommendation should be based on your full circumstances, not the CETV multiple alone.
4. If advised against transferring, take that seriously — the majority of regulated advice on DB transfers concludes that staying put is in the client's best interest.