Advice On Defined Benefit (Final Salary) Pension Transfer
A defined benefit (also known as final salary) pension scheme is where an individual’s retirement income is calculated according to their length of service with their employer and their salary at the time of retirement, or at the time of leaving their employment and revalued to retirement age if earlier.
If you have final salary benefits from previous employment then in many cases, leaving the scheme benefits where they are is the right thing to do. However, there are circumstances where you may choose to transfer benefits away from the scheme in exchange for a lump sum which gets paid into a new scheme. This is known as a final salary pension transfer.
This is particularly relevant if you require your retirement income to be more flexible, an example may be if you wish to work part time but need the flexibility to access your retirement provision to take less, or more income as the amount of hours you work fluctuates. Equally, you may have a need for capital that cannot be met by your savings, investments, or current retirement provision, an example may be where you have a mortgage that continues into your retirement which you may wish to clear. It may also be the case that the greater flexibility around who can benefit from your pension on death may also be a factor. Should you require greater flexibility in retirement you may wish to take advice regarding the options around your current pension scheme.
If this is the case and the Cash Equivalent Value (CETV) of your old pension is worth £30K or more then regulations stipulate you must get professional advice from a fully qualified Pension Transfer Specialist (PTS) who is regulated by the Financial Conduct Authority (FCA).
If you would like to know your options we can undertake a careful analysis to understand what you may be giving up and whether the lump sum offers good value for the lost benefits. This begins with us understanding your needs and objectives, receiving a transfer value quote, and then performing a detailed analysis including what benefits you would lose if you transferred and how leaving your benefits in the scheme, or transferring, would meet your needs and objectives.
Unlike many firms, we do not outsource this process. This means that you have only one point of contact and any questions you may have about this process will be answered by us as we will have a detailed understanding on exactly what is involved and the associated benefits and drawbacks. Which option is best for you depends on your circumstances and what is important to you.
Whichever type of pension scheme you have, we’ll be able to advise you on your best options.