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DB Doctor: How Equilibrium's modular approach assesses transfer suitability

DB Doctor: How Equilibrium's modular approach assesses transfer suitability

In the first of our new series of pension transfer case studies, David McKendrick, partner and chartered financial planner at Equilibrium, explains the real-life transfer advice he gave to a client, allowing her control of her finances.


Emily, aged 58, wished to discuss the potential transfer of her defined benefit pension following a revised transfer value she had received. We had previously assessed the pension as part of her overall financial planning strategy and had discounted a transfer. Since then, the value being offered by the scheme has increased significantly and so she asked us to look into this again.

Emily wished to stop working at age 60 and enjoy her retirement along with her husband, Robert. Robert was already in receipt of a large final salary pension that was adequate to meet all their day-to-day expenditure, both now and in retirement.

In addition, they had liquid assets in the form of pensions and investments outside of Emily’s scheme, which had an approximate value of £600,000 and could be used to provide any additional income. They owned their own home and had no outstanding debts.

Providing for the future

At the time of the review they were providing financial help to their daughter while she studied at university. In order to pay for this, they were drawing on funds from the investment portfolio, but expected this expenditure to be short term.

Emily’s primary motivation for considering a transfer was to have more control of her funds as she did not require a regular income to meet daily expenditures. She therefore felt she would benefit from having increased flexibility concerning how and when income was drawn from her pension.

She was also interested in the recent changes to legislation around pension death benefits that enable her to leave the pension to her daughter should she transfer, and felt this would be an opportunity to leave her daughter a legacy.


The review of a defined benefit pension scheme is a highly complex area of financial planning advice, so we have designed a modular approach to our review process for our pensions specialist financial planners to follow. 

Step by step

Our advice is delivered in three initial modules, followed by a final recommendation confirming our conclusions. The first step is a client assessment to consider suitability, the second is a scheme review and the third evaluates the financial planning opportunities that might arise as a result of undertaking a transfer.

The outcome of these modules will be a suitability rating of high, medium or low, which will help inform a rating of either suitable or not suitable. 

Embracing risk

On assessing the suitability of the transfer we concluded, given the size of Emily and Robert’s asset base, their experience of investments and their attitude towards risk, they would be comfortable with the increased risks associated with transferring out of a defined benefit environment. This solution would allow Emily to meet her objectives of having the flexibility to take income as desired and potentially having funds left over to pass on to her daughter in the event of death.

If her investments did not perform as anticipated, then some (but not all) of the benefits in transfer would be lost, but as she is in no way reliant on the pension to meet her living standards she would still be in a position to enjoy her retirement using her other assets.

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