{"id":166,"date":"2017-02-10T15:34:31","date_gmt":"2017-02-10T15:34:31","guid":{"rendered":"http:\/\/www.redstarwealth.co.uk\/blog\/?p=166"},"modified":"2017-10-30T12:40:06","modified_gmt":"2017-10-30T12:40:06","slug":"approach-with-caution","status":"publish","type":"post","link":"https:\/\/www.redstarwealth.co.uk\/blog\/approach-with-caution\/","title":{"rendered":"Final salary pension transfer – caution!"},"content":{"rendered":"

Final salary pension \u2013 stick or twist?<\/h2>\n

Many people have a \u201cfrozen\u201d pension in a Final Salary Pension Scheme, relating to a previous period of employment. This will provide a \u201cguaranteed\u201d amount of pension at the date of leaving that employment. The pension then increases either by inflation or by a fixed rate each year through to retirement, and then increases again each year in retirement.<\/p>\n

Guarantees apply only to the extent that the scheme is adequately funded by the Employer, otherwise reductions may apply.<\/p>\n

Usually, it will be possible to take a transfer value out of the scheme, into an individual pension plan, in which case the guarantees are lost and you assume the investment risk yourself, which means that your eventual pension could be lower. You would also need to bear in mind that your spouse could be affected in terms of any Widow(er)\u2019s pension that may continue from a final salary scheme after your own death.<\/p>\n

For these reasons, most advisory firms will normally caution against taking such a transfer, bearing in mind that you wouldn\u2019t be able to reverse the transfer once completed.<\/p>\n

Improved pension transfer values<\/h3>\n

What has changed in the last few years however, is the substantial increase in the amount of many transfer values. This reflects the general increase in life expectancy and the huge fall in interest rates.<\/p>\n

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Don’t ride off into retirement without proper financial advice!<\/figcaption><\/figure>\n

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A large transfer value doesn\u2019t automatically mean that a transfer is the right course of action, and it remains the case that most people will still be advised not to transfer, particularly where the final salary pension will constitute the mainstay of a person\u2019s income in retirement.<\/p>\n

When transferring a final salary pension might be a good option<\/h3>\n

There will be situations however where consideration could be given to taking a transfer. There are various scenarios where this might apply, such as:-<\/p>\n