Transferring out of a Final Salary scheme is unlikely to be in the best interests of most people.
The value of pensions and investments can fall as well as rise. You may get back less than you invested.
You may have heard that transferring your final salary pension scheme could be beneficial. Legislation changes in 2015 provides some benefits known as Pensions Freedom that require consideration whilst comparing the valuable guarantees provided by your occupational scheme.
The Department of Work and Pensions fund an independent organisation called the Pension Advisory Service and their website provides lots of useful information regarding pensions and the legislation changes in 2015.
Their website states –
In April 2015, the tax rules were changed to give people greater access to their pensions. Drawdown of pension income is taxed at marginal income tax rates rather than the previous rate of 55% for full withdrawals. The tax-free lump sum continues to be available. In order to support their decisions, individuals have access to free and impartial guidance via the phone or face-to-face, Pension Wise, to help them make the choices that reflect their needs in retirement. There are six options available including, leaving the pension pot untouched, purchasing an annuity, getting an adjustable income (Flexi Access Drawdown), taking cash in chunks (Uncrystallised Funds Pension Lump Sum), cashing in the whole pot in one go and mixing any of the options.
Your Defined Benefit Pension offers a guaranteed income for life in most cases, and normally includes provision for your spouse should you die. Transferring will mean giving up those guarantees and accepting the risk that you could be worse off in retirement.
The death benefits under a Defined Benefit Pension are different to those transferred into a personal pension or drawdown arrangement. For more information visit https://www.pensionsadvisoryservice.org.uk/content/publications-files/uploads/Death_and_taxes_SPOT024_v1.1.pdf
Your company can provide you with a Cash Equivalent Transfer Value for which it is a legal requirement to take pension advice from a qualified adviser should the value be over £30,000 and you are considering transferring the scheme.
Wealth Planning Associates provide a Pension Assessment Service to help you make an informed decision on your options.
The Pension Assessment Service
How does it work ?
1. Initial Discussion – this includes completing a full fact find as well as agreeing the customers needs and priorities
2. Details obtained from Company scheme
3. Full analysis undertaken by qualified Pension Adviser
4. Meeting to discuss the disadvantages and benefits of current scheme and transferring your scheme. The meeting will include a recommendation on whether you should transfer your scheme
5. Full report provided in writing
Call us on 08450 405 956