“Helping to understand the potential benefits and risks of a Final Salary Scheme transfer”
George Osbourne’s ‘Pensions Freedom’ reforms of 2015 provided the opportunity for members of Occupational Pensions – also known as Defined Benefit or Final Salary Schemes – to consider full access to their accrued benefits from the age of 55 via a transfer to an alternative arrangement.
Probably the most radical statement he made was that someone with a Defined Benefits Occupational Pension “no longer has to buy an annuity”. However, with this new found “freedom” comes a myriad of options making the task of deciding whether it’s the right choice, or the wrong choice, a complicated decision.
Whilst it is unlikely to be the best option for most people, there are circumstances where transferring a Defined Benefit / Final Salary Pension into a personal pension scheme may be more favourable due to the flexibility it offers.
Pension Transfers At James Glasheen Financial Planning Ltd Huddersfield
Final Salary Scheme Pension Transfers
Transferring your Defined Benefits company pension scheme into a personal arrangement is not something to be taken lightly.
However, there can be a number of advantages in doing so, dependent on the members personal circumstances and lifestyle aspirations.
Anyone considering transferring from their Final Salary pension scheme should seek the advice of a suitably qualified advisor to fully understand the potential pitfalls as well as benefits.
Advantages of transferring out include;
- Complete access to the transferred value of the fund
- Benefits can be taken from any age after 55
- Potential for a larger amount of tax-free cash
- Flexibility in choosing how benefits are taken – do you require a fixed income in retirement, or a more flexible arrangement?
- Opportunity to pass on down through generations (your fund does not ‘die’ with you)
- Opportunity to buy an annuity with the proceeds
Disadvantages of transferring out include;
- You take onboard the investment risk and associated costs of a transfer
- You give up the income guarantees provided by the scheme
- You lose any other guarantees attached to the scheme
- You lose the inflation protection and inflation proofed pension provided by your scheme
- You lose any benefits under the Pension Protection Fund
When taking advice on this important decision it is imperative that you do so with a company that has the relevant permissions and an advisor with the appropriate qualifications. You can confirm this on the FCA Financial Services Register.
James Glasheen Financial Planning Ltd has attained the appropriate qualifications to be recognised as a Pension Transfer Specialist with the FCA.
If you’re considering the potential benefits of transferring your Final Salary pension against what you’ll be giving up, then please do get in touch. We offer a free initial consultation to assess the viability of doing so before considering anything else.
Suite 007, 6 Queen Street,
Huddersfield, West Yorkshire.
01484 907000 / 07980 308868