Giving up your defined-benefit pension isn't so crazy

While defined-benefit pensions are the envy of those who don't have them, ever more people are electing to give them up, says Merryn Somerset Webb.

Those of us who don't have defined-benefit (DB) pensions have long been envious of those who do. Imagine having a guaranteed income for life on retirement. A sum of money that will turn up every month forever, regardless of what you do or don't do, and regardless of how long you live. A sum that will rise with inflation so that your "real" retirement income never falls. And, of course, a sum that comes with guarantees for your dependants as well. If you die, they'll keep getting the money. Knowing that you have all of this in the bag must provide a wonderful sense of security.

Yet increasingly large numbers of people are willing to give it up. They aren't crazy. They are realising that while there are risks in transferring out (swapping your DB pension for a lump sum to manage yourself), there are excellent reasons for doing so too.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.