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Defined Benefit Transfers: A Statistical Analysis (2025)

By QROP Direct Editorial Team · Reviewed by an independent regulated pension specialist · Reviewed 2026-06-10

Defined Benefit Transfers: A Statistical Analysis (2025)

Executive Summary

The defined benefit pension transfer market has undergone significant structural change over the past decade. From a peak of high transfer volumes in 2016–2019 — driven by historically elevated CETVs and the introduction of pension freedoms — the market has shifted toward lower volumes, higher-quality advice, and a more clearly segmented population of those for whom transfer is genuinely appropriate.

This white paper examines the available data on DB transfer trends, analyses the factors that have driven these changes, considers the specific context for UK expats, and assesses what the data implies for individuals considering transfer.

This paper is for information purposes only and does not constitute financial, tax or legal advice. DB pension transfer decisions require regulated specialist advice.

1. The DB Pension Transfer Landscape

1.1 The UK's DB Pension Legacy

The United Kingdom has one of the world's largest legacies of defined benefit pension entitlements, particularly in the public sector. ONS data indicates that millions of UK workers have deferred DB entitlements from previous employment — in the NHS, teaching, civil service, and local government, and from private sector DB schemes that operated through the late 20th century before closures accelerated in the 2000s (Source: ONS, ons.gov.uk, 2026).

The Pensions Regulator's Purple Book tracks private sector DB schemes and their funding position. As of 2024, there were approximately 5,000 private sector DB schemes in the UK, holding assets of more than £1.4 trillion. Many of these schemes are closed to new members and some are closed to future accrual — preserving significant legacy benefits for millions of deferred members.

For expats, the relevant population is those who worked in the UK for sufficient periods to accumulate meaningful DB entitlements before moving abroad. This population is substantial and growing — it encompasses everyone who left the UK for work reasons after a period of UK employment in a DB-participating employer.

1.2 What Drives CETV Levels

The Cash Equivalent Transfer Value (CETV) is the lump sum a DB scheme will pay to transfer a member's entitlement to another scheme. Its calculation is governed by scheme actuaries and involves:

• The member's projected benefit at Normal Pension Age (or at the point of transfer)
• Actuarial assumptions about longevity (life expectancy tables)
• A discount rate — reflecting the expected return on the assets used to back the liability

The discount rate is the most consequential variable in determining whether a CETV is "high" or "low." In broad terms:

Low discount rates (low gilt yields) → high CETVs. The period 2012–2021 saw historically low interest rates and quantitative easing, which compressed gilt yields. Scheme actuaries applying low discount rates produced very large CETVs. Transfer values at the 2016–2019 peak were sometimes 30–40× the annual pension income — meaning a pension paying £20,000/year might have a CETV of £600,000–£800,000.

Rising discount rates (higher interest rates) → lower CETVs. From 2022, the normalisation of interest rates significantly increased the discount rates applied in CETV calculations. CETVs fell substantially — by estimates of 20–40% in real terms for many schemes between 2021 and 2024.

This interest rate sensitivity creates a striking situation: the "value" of a pension transfer is determined significantly by macroeconomic conditions rather than the individual's circumstances. A DB pension paying £20,000/year has the same value to its member whether the CETV is £500,000 or £800,000 — the guaranteed income is the same. But the financial analysis changes substantially depending on the discount rate.

2. Transfer Volume Trends

2.1 The 2016–2019 Peak

The introduction of pension freedoms in April 2015 transformed the attractiveness of DC pension arrangements. For the first time, DC pensions could be accessed flexibly from age 55 — any amount, in any order, as a lump sum or drawdown income. This flexibility made DC attractive relative to the fixed income profile of a DB pension.

Simultaneously, CETVs were at historic highs due to low interest rates. And QROPS transfers to EEA jurisdictions were OTC-exempt under the EEA blanket exemption.

The combination produced a spike in DB transfer activity between 2016 and 2019 that the FCA and TPR identified as concerning. A significant proportion of this transfer volume was associated with unsuitable advice and, in some cases, pension scams.

2.2 The Regulatory Intervention (2018–2022)

The FCA's Consultation Paper CP17/16 and subsequent policy statements significantly tightened DB transfer advice requirements. The introduction of the APTA methodology, the requirement that advice start from a presumption of retaining, and enhanced qualification requirements for pension transfer specialists materially changed the advice landscape.

The FCA's review of DB transfer advice quality (2021–22) found that a significant minority of firms had given unsuitable advice. Enforcement actions and firm closures followed. The consolidation of the advice market around higher-quality, better-regulated firms has reduced transfer volumes.

2.3 The Post-2022 Environment

From 2022, two factors combined to further reduce transfer volumes:

Interest rate normalisation. The Bank of England's rate-raising cycle from late 2021 significantly compressed CETVs. Members who had been offered large CETVs in 2020–21 found that equivalent calculations in 2022–23 produced smaller values. Some who had been close to transferring decided the financial case had materially weakened.

Increased advice burden. The tighter regulatory requirements mean that a full DB transfer advice engagement — fact-find, CETV quotation, APTA, suitability report — takes longer and costs more than it did in 2016. This acts as a filter, reducing the number of cases that proceed to transfer.

Net effect: Transfer volumes in 2023–24 are estimated to be substantially lower than the 2016–2019 peak, though exact industry-wide data is not publicly available.

3. Who Transfers: A Profile

3.1 The Transfer-Appropriate Case

Based on the characteristics of cases where regulated advisers recommend transfer, the typical transfer-appropriate member has some combination of:

• Adverse health or reduced life expectancy. The actuarial assumptions in a CETV assume average longevity. A member with a serious health condition has a shorter expected benefit period — the CETV overpays relative to expected lifetime benefit. For these members, a lump sum may genuinely be worth more.

• No dependants. DB pensions typically include survivor pensions for spouses and civil partners. Members with no dependants do not value this benefit — the comparison between lump sum and pension income is therefore more favourable for transfer.

• Specific overseas tax advantages. A member living in a jurisdiction where pension income is taxed at a lower rate than the UK, or where the DTA structure creates a specific tax advantage for DC income over DB income, may have an additional financial case for transfer.

• Significant other guaranteed income. A member who already has substantial guaranteed income from other sources (State Pension, other DB pensions, property income) may be less dependent on the DB pension as a guaranteed income stream — making the flexibility of DC more valuable.

• Concerns about scheme security. Although most DB schemes have meaningful protections through the Pension Protection Fund, members of schemes with materially underfunded positions or employers facing financial difficulty may have specific reasons to prefer the certainty of a transfer value over a future benefit promise.

3.2 The Transfer-Inappropriate Case

The vast majority of cases. A healthy 55-year-old with a DB pension paying £20,000/year, with a spouse and a normal life expectancy, living in a country where pension income is taxed at standard rates, almost always receives a recommendation to retain. The lifetime value of the guaranteed income exceeds the CETV in most actuarial scenarios.

3.3 The Expat Dimension

For expats, the relevant additional considerations:

DTA treatment. If the member is moving to a country where the DTA taxes pension income favourably, this can improve the relative value of DC (QROPS or SIPP drawdown) income compared to DB income.

Access to advice. Expats may have fewer access points for quality DB transfer advice. Some UK-regulated pension transfer specialists do not advise internationally, reducing options.

Scam risk. Expats are disproportionately targeted by pension scam promoters. A transfer that might be appropriate in a regulated advice context can become a vehicle for fraud when promoted through unregulated channels.

4. Implications for DB Transfer Decision-Making

4.1 The Analytical Framework

The APTA methodology provides a consistent analytical framework. Members considering transfer should insist on seeing:

1. The CETV and its calculation basis
2. The comparator value — the amount needed to replicate the guaranteed income
3. The difference between CETV and comparator (typically negative — CETV is less than what you'd need)
4. The qualitative analysis of personal circumstances that could nonetheless support a transfer recommendation

4.2 The Role of Interest Rates

With rates having normalised from 2022 lows, CETVs in 2025 are lower than at peak. This matters for the decision: those who transferred at peak values in 2020–21 may have received a CETV that generously overstated the "price" of the pension relative to current rates. Those considering transfer in 2025–26 are working with lower CETVs.

If interest rates fall significantly in coming years (a scenario relevant if economic conditions weaken), CETVs would rise again. Members who are close to the transfer/retain decision boundary might find the analysis shifts if they wait for a rate change — though timing the CETV market is inherently speculative.

4.3 Conclusion

The DB transfer decision remains one of the most consequential and irreversible financial choices available to UK pension holders. The data — both the FCA's regulatory findings and the actuarial analysis embedded in the APTA methodology — consistently shows that for the majority of members, retaining the deferred pension is the right outcome.

For expats, the case for careful, independent, specialist analysis is even stronger: the cross-border complexity, the scam risk, and the specific overseas factors that might support a transfer all require expert assessment that is not available from unregulated promoters or generic financial advice.