Transfer value (CETV) explained Updated for 2026/27

If you've built up benefits in a defined benefit (DB) pension — sometimes called a final salary or career average scheme — you might have received, or requested, a letter quoting your Cash Equivalent Transfer Value, or CETV. For many people, this is the first time they've seen their pension expressed as a single lump sum rather than a promised income, and the number can be eye-watering: transfer values running into hundreds of thousands of pounds are common even for fairly modest annual pensions. That size is exactly what makes CETVs both exciting and, potentially, dangerous. Exciting, because it can feel like a windfall sitting there for the taking. Potentially risky, because a big number on a letter doesn't automatically mean transferring out is a good idea for you — in most cases, giving up a guaranteed, inflation-linked income for the rest of your life is a much bigger decision than the headline figure alone suggests. This guide explains exactly what a CETV is, how it's worked out, why it moves around from one quote to the next, and what you're really giving up if you decide to transfer. For a closer look at whether transferring might actually suit your own circumstances, see our companion guide, Should I transfer out?

What is a CETV?

A Cash Equivalent Transfer Value is the amount your DB scheme's actuary calculates as being broadly equivalent, in today's money, to giving up your right to the pension you've built up in that scheme. Instead of receiving a guaranteed income for life starting at a set retirement age, you'd receive this one-off lump sum, which you could then move into a defined contribution (DC) arrangement such as a personal pension or self-invested personal pension (SIPP). Once transferred, the money becomes yours to invest and draw down as you choose, subject to the usual pension tax rules — but the guarantee disappears with it. The scheme no longer owes you anything once the transfer has gone through; the promise of an index-linked income for however long you live, and often a pension for your spouse or civil partner after you die, is exchanged for a pot of money whose future value depends entirely on investment returns, how much you draw, and how long it needs to last.

Every DB scheme is legally required to provide a free CETV quotation once every twelve months if you ask for one, and most statements are guaranteed to be honoured for three months from the calculation date, after which the actual figure may be recalculated if you go ahead. It's worth remembering that a CETV quote is not an offer of cash sitting in an account waiting for you — it's a calculated estimate that only becomes a real transfer if you actually go through with the process, which for most people includes a mandatory advice step (covered below and in our transfer decision guide).

Why CETVs can look surprisingly large

It's common to see a CETV quoted at 20 to 30 times the annual pension it replaces, and sometimes more. On the surface that looks incredibly generous — a £15,000 a year pension turning into a £400,000+ lump sum feels like a huge sum of money. But the multiple looks large precisely because a lifetime of guaranteed, inflation-linked income is expensive to replicate. Insurers and actuaries have to set aside enough capital, invested cautiously, to be confident it can pay that income every year, adjusted upward each year for inflation, for as long as you (and potentially your spouse afterwards) are alive — which, for someone retiring today, could easily mean 25, 30 or more years of payments.

To put it another way: replacing a guaranteed £15,000 a year, rising each year with inflation, paid out from age 65 for a life expectancy that might stretch into someone's late eighties or nineties, genuinely does require a very large pot if you wanted to buy an equivalent guaranteed income (an annuity) with it. The size of the CETV isn't a bonus or a gift from the scheme — it's simply what it costs, statistically, to replace what you're giving up. That's an important distinction, because it means a large CETV is not automatically "free money" or evidence that you're being offered a great deal. It's a reflection of the value of what you already have.

How a CETV is actually calculated

Working out a CETV is a specialist actuarial exercise, but the ingredients are broadly consistent across schemes. The scheme actuary starts with your accrued pension — the amount you're due to receive from your scheme's normal retirement date, based on your service and salary history — and then works out the present-day capital sum needed to fund all the future payments that pension implies. Several key assumptions drive the number:

Because these are all long-term projections rather than certainties, two schemes valuing an identical pension promise could quite legitimately produce different CETVs, depending on the assumptions their actuary uses (within limits set by regulation and professional actuarial guidance). This is one reason CETV shopping between schemes doesn't really make sense — you can't choose which scheme's pension you've earned, and the CETV is simply a translation of that specific promise into today's money.

Why CETVs fluctuate over time

If you've ever compared a CETV quote from a few years ago with a more recent one, you may have noticed the figure can change quite dramatically even though your underlying pension entitlement hasn't changed much at all. This is because CETVs are highly sensitive to gilt yields and interest rates. When yields are low, actuaries need a larger pot of capital today to be confident of generating the future income required — so CETVs tend to rise. When yields rise, the same future pension can be funded with a smaller pot today, so CETVs tend to fall. This relationship caught many people out in 2022, when a sharp rise in gilt yields caused CETVs across the industry to fall substantially and quickly, sometimes by 30% or more in a matter of months, even though nothing about the underlying guaranteed pension had changed.

The practical lesson is that a CETV quote is a snapshot, not a fixed asset value. If you're seriously weighing up a transfer, the number you're quoted today could look quite different in six or twelve months' time, in either direction. This is exactly why the guaranteed pension itself — which doesn't move around with market conditions — is often the safer thing to rely on, rather than trying to "time" a good CETV quote.

Illustrative CETV multiples by age and circumstance

The table below shows broadly typical (illustrative only) CETV multiples for different ages and distances from normal retirement date. Real figures vary enormously by scheme, individual circumstances, and market conditions at the valuation date, so treat this purely as a guide to the shape of the relationship, not a prediction for your own pension.

Notice that the multiple tends to be higher the further you are from retirement — largely because there's more time for the scheme's assumed investment growth to do the work, so less capital is needed today. As you get closer to your scheme's normal retirement date, the multiple typically falls, even though the underlying annual pension amount is usually higher by then thanks to continued accrual and revaluation.

What you actually give up if you transfer

It's easy to focus on the lump sum and lose sight of exactly what disappears if you transfer out. The main things you're giving up are:

• 1

  A guaranteed income for life — your DB pension is payable for as long as you live, no matter how long that turns out to be, and it doesn't run out if investment markets perform badly.

• 2

  Inflation protection — most DB pensions increase each year in line with inflation (often capped), which is expensive and difficult to replicate reliably through your own investments.

• 3

  A spouse's or dependant's pension — many schemes automatically pay a pension to your spouse, civil partner, or dependent children after you die, which a transferred pot doesn't guarantee unless you specifically plan and manage for it.

• 4

  Protection from investment and longevity risk — with a DB pension, the scheme (backstopped by the Pension Protection Fund if the employer becomes insolvent) carries the risk of poor investment returns or you living longer than expected. Transfer out, and both risks become yours.

• 5

  Simplicity — a DB pension pays out automatically with no ongoing decisions required from you. A transferred pot needs active management, decisions about how much to draw and when, and carries the risk of running out if drawn down too quickly.

None of this means transferring is always the wrong choice — there are situations, covered in our companion guide, where it can genuinely suit someone's circumstances. But it does mean the decision should never be made purely on the size of the CETV number relative to the annual pension. The comparison that matters is between a guaranteed, inflation-linked income for life on one hand, and a pot of money whose future is uncertain on the other.

What happens if you want to explore transferring

If your CETV is £30,000 or more, UK law requires you to take regulated financial advice from a suitably qualified pension transfer specialist before any scheme is allowed to proceed with the transfer. This isn't a box-ticking formality — it exists because giving up guaranteed benefits is a serious, generally irreversible decision, and the rules are designed to make sure it isn't taken lightly or on the strength of a single attractive-looking figure. Our guide, Should I transfer out?, walks through when transferring might genuinely make sense, the risks involved, and how to find a qualified adviser.