Is Your “Guaranteed” UK Pension Really Guaranteed?

If you’ve moved to New Zealand and you have a UK defined benefit (DB) pension, you’ve probably heard the advice: “Never transfer it. It’s a guaranteed income for life.”
That advice sounds safe. And for some people, it’s right. But in my experience, after reviewing hundreds of these pensions, I’ve found something surprising:

More often than not, there’s a strong case to transfer.

Even when you want to be known as the impartial the adviser who says, “Don’t transfer,” when this is in your best interests, the numbers and the reality of living in New Zealand often say otherwise.

Here’s why:

Your “guaranteed” income is guaranteed in pounds, not dollars

A UK defined benefit pension pays a fixed income in GBP. That sounds secure, but if you’re living in New Zealand, your spending is in NZD. So what you really have is a big, concentrated bet on the British pound.

If the pound weakens against the New Zealand dollar, your “guaranteed” income could lose significant purchasing power, even while the UK scheme keeps paying exactly what it promised in pounds.

In contrast, a transferred pension can be invested in a diversified portfolio spread across countries, companies, and industries. That gives you exposure to global growth and a much more resilient base than relying on one country’s currency.

The UK’s financial position is not bulletproof

The UK’s debt sits at around 104% of GDP, compared to about 55% in New Zealand. That’s a big difference, and it matters.

High debt acts like a handbrake on an economy and can weaken a currency over time. And when governments look for extra revenue, they often turn to pensions through new taxes, rule changes, or limits on overseas members.

So your “guaranteed” income is only as secure as the government backing it, and in the UK, that’s a heavier burden than many people realise.

What is a defined benefit pension?

A defined benefit (DB) pension provides a guaranteed income for life based on a formula, not on investment performance. That formula usually considers your salary and years of service.
Sometimes it’s linked to your final salary, other times to your average salary, or simply a fixed percentage that builds over time.

The key point is this: It’s an income-based promise, paid in GBP, not a pot of money you control or invest yourself. And if you’re planning to retire in New Zealand, that difference is crucial.

“Guaranteed income” can mean less flexibility

A defined benefit pension locks you into a fixed income.

You can’t access lump sums for investments or major expenses, control how your funds are invested, or pass remaining capital to your children or spouse if you die early.

A transfer gives you flexibility and control — the ability to align your retirement plan with your life in New Zealand, your family goals, and your tax situation.

For many, the risk is not transferring

If your plan is to build your life here, the bigger risk may be staying tied to a single foreign currency and a rigid structure.

A diversified portfolio invested across the world, aligned to your retirement goals in New Zealand, can be more defensive and more adaptable than a fixed GBP pension.

Every case is different. There are plenty of times where you shouldn’t transfer, especially if the lump sum to transfer is quite low compared to your income, or if you are not very certain that you will be in New Zealand for the next 5 years.

Having said this, when you run the numbers and factor in currency risk, flexibility, estate planning, tax, and your actual life in New Zealand, it’s very common for a transfer to make sense.

If you don’t at least review it, you could be leaving money on the table, taking hidden risks, or missing opportunities for flexibility and control.

Summary

If you’re living in New Zealand with a UK defined benefit pension, don’t just assume it’s best to leave it where it is. Your “guaranteed income” might not be as safe or as useful as you think.

A proper pension transfer review will tell you whether you should keep it in the UK, or bring it to New Zealand for a globally diversified, flexible retirement plan.

Either way, you’ll know for sure, and that clarity is valuable in itself.

If you’d like a free initial review of your UK pension options, get in touch and book in a free initial meeting. You might find that what seems “safe” could actually be the riskier choice.