Final Salary Pension Transfer Advice
Get the future you want with an FCA registered adviser.
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Get the future you want with an FCA registered adviser.
Final Salary or Defined Benefit (DB) pensions are an older type of pension scheme, that’s less common these days.
This type of pension provides a guaranteed income for life. Your final salary is used to calculate benefits, or it can be based on the average salary earned during membership of the scheme.
When it comes to specialist advice on defined benefit /final salary pensions, not all financial advisers have the FCA permissions needed.
We do, plus lots of experience.
And, everything we recommend is tailored to you and what you want to do, not just the figures.
With final salary pensions, there’s quite a bit of work involved in looking at whether transferring is a good idea for you. It’s not just about getting a form signed.
Our specialist team are fantastic at dealing with all the difficult bits, so all you need to do is decide what lifestyle you want in retirement.
Do you want five exotic holidays a year or are you looking to potter in the garden?
Whatever your ideal future retirement, we can help you plan it and work out how to use your assets to get it.
Whether to transfer a pension or not is a big decision.
So, here’s all the latest information and discussions
on whether it’s a good idea.
Final Salary pensions are commonly found in both the public and private sector. Traditionally, they were common within industries such as oil, gas, chemicals and engineering. However, in the modern world, they are more common in public sector roles such as teachers, NHS workers, emergency services, the armed forces and many others.
There are many members in a Final Salary pension scheme, generally speaking, each member pays a percentage often the members pay a contribution to the scheme. Some Final Salary schemes don’t request member contributions, but these are less common. Your employer then subsidises — sometimes paying as much as three times the amount you put in or more.
If you’ve come from one of the above industries or have worked in the public sector, there’s a good chance you have a Final Salary pension. Your employer, pension provider or an independent financial adviser such as Joslin Rhodes will be able to clear up which scheme you’re in.
Are Final Salary pensions good?
Generally speaking, they’re very good as they provide a secure income for life which is risk-free. You don’t need to manage anything, and they generally increase in value every year typically in line with inflation. However, like any pension scheme, it has its advantages and disadvantages.
Advantages
Disadvantages
Transferring from your Final Salary pension can give you more options, but it’s not for everyone. Just because a colleague or family member has done it, doesn’t mean it’s right for you.
You should look to speak with a financial adviser for the best possible advice on whether transferring or remaining in the scheme is the correct decision for you.
Generally speaking, the default decision is that remaining in the scheme is most appropriate for them.
Looking for the Pension Transfer Gold Standard can help you recognise good practice and, ethical and professional standards when looking for pension transfer advice. It’s essentially a series of nine principles that set out a robust and comprehensive code of practice for advising on
Defined Benefit/Final Salary pensions above standard industry regulations set by the UK financial services regulator, the Financial Conduct Authority (FCA).
A common reason for looking to take advice about your DB scheme is the possibility of greater flexibility. If you’ve got a Final Salary pension, but like the sound of this, in most cases, you can opt to transfer it to a Defined Contribution (DC) scheme, which gives you the option to move your pension into Drawdown. However, giving up a secure income requires careful consideration.
Like everything in life, too much freedom isn’t always a good thing. If you use that flexibility to overspend, your pot could run out quicker than you anticipate. Plus, there are investment risks and also tax implications should you take large amounts from a drawdown pension there are also investment charges and advice charges that aren’t payable in a DB scheme.
Another common reason for transferring to access Drawdown is it also allows for a death lump sum.
Under current rules, if you die before you’re 75, your pot will be passed on tax-free. If you’re over 75, it can be passed on as a lump sum that may be subject to tax at the heirs’ personal income tax rate.
Suppose you’re already in retirement when you die. In that case, your pension will be passed on to your spouse, civil partner or any other dependent, but only if your pension includes explicitly spousal benefits. However, it’ll generally be reduced by as much as 50%.
If you pass away before you take your pension, many schemes will pay out a lump sum, which can be tax-free if you die before you’re 75. Your spouse, partner or other dependents can also potentially receive a taxable ‘survivor’s pension.’
Enough for what? How do you want YOUR retirement to look?
Before you think about taking advice on your pension options — or even thinking about your scheme — you need to think about your retirement lifestyle.
Knowing what you’ll be doing helps answer whether you’ve enough or not.
All the hard work done for you
With Final Salary pensions, there’s quite a bit of work involved in looking at whether your options for accessing your pension good idea for you. It’s not just about getting a form signed.
Our specialist team are fantastic at dealing with all the difficult bits, so all you need to do is decide what lifestyle you want in retirement.
We’ll give you all the information and cash-flow modelling you’ll need to help understand the options available to you.
What does your retirement look like?
Do you want five exotic holidays a year or are you looking to potter in the garden?
Whatever your ideal future retirement, we can help you plan it and work out how to use your assets to get it.
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