Frozen Final Salary Pension

A final salary pension is one that may be offered to you by your employer. The amount you receive is based on how long you’ve worked for the company and how much you’ve earned during that time.

When it becomes “frozen”, or dormant, this refers to a point when you leave that company and you and your employer stop making contributions.

If you have a frozen final salary pension scheme, then it’s important to be aware of what that means for you. This article will explain what your options are.

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I have a “frozen” final salary pension, what can I do?

The first thing we recommended you do is speak to one of the pensions advisors we work with. They are equipped with the knowledge that will guide you to make the best decision for you and your money.

They may discuss the options that are open to you, such as transferring to a defined contribution scheme, but bear in mind that as with all pensions, unless you have special circumstances, usually medical related, you cannot cash in a pension before the age of 55. Every pension will have its own rules too, so if you have several pensions, they may have different rules associated with them.

Should I transfer it?

Transferring frozen final salary pensions are an option for some types of pension. The process involves transferring a cash equivalent transfer value (CETV) into the active pension you’re currently using, if you have one, or setting up a new one.

Be aware of the implications before you make a decision to do this. Final salary pensions have added benefits because they don’t decrease in value and if you transfer it to a different type of pension your money may be at risk.

Note: There are some final salary pensions, such as public sector ones that can’t be transferred, these include NHS, police and firefighter pensions.

Here are some other pros and cons to be aware of:


  • You’ll have more access to your money, giving you greater control over it.
  • If you’d like to take out a lump sum, 25% of which will be tax free, then you have the option to do that, although you have to be over 55 years of age.


  • Final salary pension schemes are considered to be the securest type of pension.
  • You will miss out on final salary benefits such as ‘index linking’ where your pension may increase with inflation.
  • The CETV rate may not be as good value as leaving your final salary pension as it is.

What other options are there?

Create a new personal pension

As an alternative to a workplace pension, you can open up your own private pension where only you can deposit funds. You can add any dormant pensions to the same fund so that when you’re at pensionable age, you’re able to have easy access to all your money in one place.

Request a lump sum

If you’re aged 55 or above you can take out some of your pension by requesting a lump sum withdrawal however the result of this that you’ll have a reduced pension income from whatever is left.

Buy an annuity

One way to ensure you receive a regular income, similar to a salary for life, is to buy an annuity. Again this is only an option when you reach the age of 55 but it allows you to make the most of your pension but spreading it out into equal payments throughout each year.

Drawdown your final salary pension that’s frozen

Again, if you’re aged 55 and over, a drawdown is a favourable option for some. It means you can take out as little or as much as you need whenever you want to, and then leave the rest for investments.

Will it be safe if I don’t do anything?

Final salary pensions are considered safe pensions because you’re guaranteed a set amount, (as explained earlier in this article, this is fixed by how long you’ve worked and how much you earned). This means that from the time the pension becomes dormant, until you reach your retirement date, the amount of pension probably won’t decrease in value, and it may even go up.

However it’s still advisable that you stay informed about it. Ask your previous employer or the pension company for your final statement, this will show you how much you may receive.

Where can I get further advice?

The government recommends that when you get pensions advice, it should be from a regulated pensions advisor.

The experts we work with are all regulated pensions advisors, simply call us on 0808 189 0463 or make an enquiry here. We work with credited advisors who understand the pensions market.

So sit back and let us do all the hard work in finding the pension advisor with the right expertise for your circumstances.  We don’t charge a fee and there’s absolutely no obligation.

We can arrange a free pension review for you today

70% of customers who have a pension review find a better deal

We can arrange a free pension review for you today

70% of customers who have a pension review find a better deal

Tony has worked in a vastly diverse array of areas in the pensions industry for over 2 decades. Tony regularly writes for trade press, usually on topical and pensions pieces as well as acting as a judge at prestigious national events. Tony is also a highly qualified Independent Financial Adviser in his own right. His mantra has always been "Hope for the best, but PLAN for the worst", and believes that the biggest impact that an adviser can have on a client's life journey is to take them on a journey from generally having little or no real idea of what their retirement will look like, to giving them the understanding of what their retirement looks like now, then helping them navigate a path to what they WANT their retirement to be.

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