Jase, they're doing the same to me. It's becaue they want to reduce their liabilities. I would NOT cash in. (*unless you are sure that you will get more money via the cash in route, the hard facts are that this will require you to accurately predict future stock market performance/interest rates/inflation etc and when your Mrs will die, sorry but it is that harsh)
Consider their position, - now they have to pay your Mrs 60 a week [presumably with index linking] till she dies [*IMPORTANT are there benefits for dependents etc as that needs to be costed in], ie they actually have unlimited liability [*ok it's not totally unlimited, as death is inevitable but say we get 10 years of 10% inflation and she lives to 105 which is possible]
By giving you a one off they convert to a fixed liability - £X, however your wife ONLY gets a better deal depending on, how long she lives, stock market performance etc etc.
In old age people want/need security, I'm not fully aware of the monies etc but IMHO a final salary pension if worth hanging onto, even if that amout it only helps you spread the risk.