This type of pension scheme normally ensures that you receive a fixed percentage pension which is calculated according to your pensionable service and last salary when you finished working for the company or decided to retire.
There are other benefits:
Your dependents can receive benefits if you die before retirement.
Your pension may be calculated with regards to service you might have given the company as opposed to service you did give that was cut short because of bad health.
Even the calculation of your pension transfer could lose or save you a lot of money. Rather than be calculated based on money invested in the defined benefit scheme by you and your employer, the value of the transfer is based on how much you are entitled to under the terms of the scheme. Transferring to a defined contribution scheme is a risky business because you will be waiving any money you were entitled to without knowledge of what benefits you will get until the time comes to take them.
With the help of a financial advisor, you will be able to see what benefits you will be losing via a transfer value analysis report. It is also possible to find out if the transfer will cause your benefits to increase or decrease compared to what you would have received on your old pension scheme. Those who are involved in the above pension scheme with their employers will almost certainly be advised against a transfer.
On rare occasions, an advisor may recommend a transfer because analysis of the employer’s scheme shows that it is not completely funded and might not meet its liabilities. If this is the reason for a potential transfer, it is imperative that you discuss matters fully with a financial advisor because it is a complex area that only professionals understand completely.