Final Salary Transfers

The example below provides the important figures and dates relating to a final salary pension transfer, which in this case was transferred into a Self-Invested Personal Pension 6 years and 4 months before our Client received the maximum permitted compensation of £50,000.

Although it is not possible to transfer back into a final salary pension, the figures highlight the hypothetical ‘put back’ figure (or cost) required to replace the valuable, guaranteed benefits that final salary pension schemes generally provide.

Case Study – Mr J.P.

Transferred Final Salary Pension into a SIPP on 08/09/2011.
The Cash Equivalent Transfer Value (CETV): £38,143.02 (Amount transferred into the SIPP)
Final Salary Scheme:  BAE Systems.
Gross ‘put back’ figure: £134,909.35.  (3.5 x the CETV)

Investment Portfolio value:

Harlequin Property: £0
Cash in the SIPP bank account: £3,242.57
Net loss prior to compensation paid: £131,666.78
Maximum compensation paid on 23/01/2018: £50,000.
 Potential future claim against SIPP trustee: £81,666.78

Even if the cash value of £38,143.02 had been invested in more proven, credible products, it is extremely doubtful that any investment would have grown the fund value to an amount equivalent to the gross ‘put back’ figure of £134,909.35. Therefore, all too often, as this case highlights, clients experience an overall financial loss. This (and many other cases) also highlight that even a ‘cash equivalent transfer value’ as little as £10,000 transferred from a final salary pension, as recent as 6 years ago could still result in a compensation amounting to tens of thousands of pounds.


This example highlights why it is rarely suitable to transfer out of a final salary pension scheme. Despite this, thousands have, for various reasons, which include having full access to their pension fund(s) from age 55, granted by the Government’s ‘Pension Freedoms’ in April 2015.

Please note that it is not possible to re-join a final salary scheme.

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