Some pensions include special features that guarantee how much you’ll receive in retirement. These are known as safeguarded benefits and are typically found in older or workplace pension schemes.

They’re valuable because they offer certainty, rather than depending on investment performance.

Common types of safeguarded benefits include:

• Defined benefit (final salary) pensions, which pay a guaranteed income based on your salary and length of service

• Guaranteed annuity rates, which can provide a higher level of income than current market rates

• Other guarantees, such as minimum income levels or protected growth rates

What happens if you transfer

If you transfer a pension with safeguarded benefits into a SIPP:

• You will give up these guarantees

• Your pension value will instead be invested and can go up or down

• Your future retirement income will no longer be guaranteed

This is a significant decision and may not be in your best interests.

Advice requirement

If your pension includes safeguarded benefits, you’re required to take advice from a regulated financial adviser before transferring.

If you’re unsure

You can check whether your pension includes safeguarded benefits by:

• Reviewing your pension documents

• Contacting your current provider

• Speaking to a financial adviser

Taking the time to understand this now can help you avoid giving up valuable benefits.