PENSION TRANSFERS

You may or may have previously worked for a large, national or global employer who provided you with a final salary occupational pension scheme. Historically, these were offered during a time when the ‘job for life’ was much more representative of most individual’s careers at the time. These schemes offer attractive retirement benefits that are also secure for life.

Pension Freedoms 2015

The introduction of new pension freedoms in April 2015 now meant those with defined benefit schemes operating in the private sector now have a wider array of choices both before and during retirement that were previously unavailable. However with greater flexibility, it now places more responsibility on you to ensure your largest asset is well protected and invested wisely.

In behavioural finance, this is known as the Hirschlaefer effect, where having greater choices means making a decision is far more difficult and requires a thorough examination of all options and their consequences before proceeding.

The need for pension transfer advice

Pension scheme transfers offered by employers are a complex area of financial advice and thus require specialist advice from a qualified adviser. In order for any adviser to provide such advice, a firm must hold the appropriate FCA permissions. Any transfer advice of actions relating to this activity must be undertaken by a pension transfer specialist, unless it is is valued below £30,000.

Examining the benefits and costs

When providing such advice, we will take a broad view to your personal circumstances by looking at the provisions you currently have in place (including any secure benefits offered by your employer) and your goals for the future entering into retirement.

Whilst getting transfer advice is necessary before transferring in the majority of cases, it is worth noting that it will not be suitable for everyone and since you will be leaving secure benefits for future uncertain incomes, we will initially start with the belief that a transfer is not appropriate.

Areas of pension transfer advice

  • Defined Benefit (DB) schemes
  • Personal pensions
  • Group Personal Pension (GPP) plans
  • Self Invested Personal Pension (SIPP) schemes
  • Small Self-Administered Schemes (SSAS) plans
  • Section 32 Buyout’s
  • Pension drawdown accounts

Pension Transfers

What we will provide you

  • Provide a detailed report outlining the pension benefits you are set to receive under your current scheme
  • Understand how your pension will be treated upon death both pre and post-retirement.
  • Calculate the critical yield necessary in order for benefits to be equal to those offered under your defined benefit scheme.
  • Assess your risk profile
  • Explore the advantages and disadvantages of transferring
  • Research the market to find the right providers that are best suited to your individual requirements and future needs

Examining the ‘pros and cons’

When providing such advice, we will take a broad view to your personal circumstances by looking at the provisions you currently have in place (including any secure benefits offered by your employer) and your goals for the future entering into retirement.

Whilst getting transfer advice is necessary before transferring in the majority of cases, it is worth noting that it will not be suitable for everyone and since you will be leaving secure benefits for future uncertain incomes, we will initially start with the belief that a transfer is not appropriate.

Reasons for wanting to transfer

There may be various reasons why you are considering transferring your pension scheme. Your future objectives and risk profile will be considered as part of the advice process, but we will also factor in the true loss of secure benefits from remaining within the final salary scheme before suggesting whether a transfer is appropriate.

You want greater control over your investments

Managing your investments yourself could allow you total market access to a wider range of options across different asset classes. It is typical for most defined contribution occupational schemes to offer only a limited number of individual investment funds. With defined benefit schemes, your employer takes all of this financial risk to provide you with secure benefits. If you transfer out of a final salary scheme, you will be fully responsible in ensuring the pot is invested wisely.

You want better death benefits

With most employer-funded defined benefit schemes, there is often less provision in regards to how your pension is passed to loved ones upon death. Some will offer up to half of the pension income to be made to a married spouse until their death. However this is dependent on the scheme provider. With the pension freedoms introduced in April 2015, your pension pot can be passed down as a legacy (often tax-free) upon your death to a beneficiary of your choice.

Additional cash benefits

Defined benefit schemes are costly to manage and administer with many providers providing additional cash incentives and bonuses to turn a future unknown liability into a known one.

Transparent fee structure

Our fee structure is designed to be as transparent as possible, and seeks to reward long-standing clients who have grown their wealth with us. The fees charged will vary depending on the exact service and personal requirements. We believe that clients should only pay for the work that is undertaken which is why we provide a full outline of costs (both initial and ongoing) when presenting our recommendations.

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Guide to Pension Transfers

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