As things stand today, there has never been a better time to consider cashing in a final salary pension. This is down to the fact that transfer values are at record highs. Some schemes are offering transfer values of 40 times the annual pension, so £800,000 today for an inflation-linked pension of £20,000 a year for life. As a rule of thumb, prior to the pension freedoms transfer values were typically around 20 times. Of course, this varies from scheme to scheme.
Transfer values have risen so dramatically because yields from bonds – in which final salary and defined benefit pensions are mainly invested – have fallen to record lows. Low bond yields increase the cost to pension schemes, as they need larger funds to produce the same income, for your pension due, which is why they are keen to reduce their liabilities and get pension savers with financial salary pensions off their books.