What is a safeguarded benefit?

A safeguarded benefit is a promise about your pension. It might be a guaranteed income for life, or a guaranteed rate for turning your savings into an income.

Most modern pensions are simply a pot of money with no promise attached. These are called defined contribution pensions, and they’re the kind Chip is built for. Safeguarded benefits are more common in older pensions, often set up in the 1980s and 1990s.

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The main types to look out for: 

• Defined benefit (or final salary) pensions. These pay you a set income for life, based on your salary and how long you worked there. The income is guaranteed, so it doesn’t rise and fall with the stock market.
• Guaranteed annuity rate (GAR). A promise that you can swap your pot for a guaranteed income at a set rate. Older rates are often far higher than the rates available today, so this can be very valuable.
• Guaranteed (or protected) pension age. The right to take your pension earlier than the normal age, which is currently 55 and rising to 57 in April 2028. Transferring could mean losing this.
• Guaranteed minimum pension (GMP). A minimum amount your scheme must pay you. You may have this if you were “contracted out” of part of the State Pension before April 1997.
• Other guarantees. Some pensions also include guaranteed growth or bonus rates, or let you take more than the usual 25% as tax-free cash.

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Why this matters

Guarantees like these are hard to find anywhere else, and you usually can’t replace them once they’re gone. Giving one up could leave you worse off in retirement. That’s why there are extra rules in place to protect you.

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Can Chip accept a pension with safeguarded benefits?

No. Chip’s pension is built for old defined contribution pensions, which are a simple pot of money. We can’t accept a transfer that includes safeguarded benefits or guarantees, regardless of value. If your pension has a guarantee, the safest thing is usually to leave it where it is.

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If you’re thinking about moving it

If you still want to move a pension that has guarantees you should consider whether to speak to a regulated financial adviser first. They can look at your situation and tell you whether it’s the right move for you.

In some cases the law requires this. If your safeguarded benefits are worth more than £30,000, you must take regulated advice before you can transfer, and the provider you’re leaving has to check that you’ve done so.

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Before you transfer, check for:

• a guaranteed income, or a guaranteed annuity rate
• the right to take your pension before age 55
• a guaranteed minimum pension, if you were contracted out
• exit fees or penalties for leaving
• valuable extras, such as life cover or extra tax-free cash

Your current provider can tell you. You can also check your most recent statement or your scheme booklet.

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Not sure what you have?

If you’re not sure what type of pension you have, or whether it comes with any guarantees, ask your current provider. They can tell you for free.

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Where to get free help

For free, impartial guidance, you can contact MoneyHelper, which is backed by the government.

To find a regulated financial adviser, you can use the directory on MoneyHelper, or check the Financial Conduct Authority register to know whether a firm or advisor is authorised by the FCA.

If you’re 50 or over, you can also book a free pension appointment with Pension Wise.