UK State Pension and Defined Benefit Pensions — What They're Worth

UK State Pension in 2024

The full new State Pension is £221.20 per week (2024/25), or approximately £11,502 per year. To receive the full amount, you need 35 qualifying years of National Insurance contributions.

This is worth roughly £150,000–£200,000 as a lump sum equivalent — a significant asset that most people undervalue when thinking about retirement.

Defined Benefit (DB) schemes

If you're fortunate enough to have a final salary or career average DB pension, treat it as gold. The employer assumes all investment and longevity risk. Your guaranteed income is essentially a private annuity funded by the employer.

The critical yield calculation

When considering a DB to DC transfer, the "critical yield" is the return your DC pot would need to achieve to equal the DB pension income. For most people, this exceeds 5–7% — which means DB schemes are usually worth keeping unless you have specific estate planning or health reasons to transfer.