Transfer values from final salary schemes have increased significantly over the past 12 months. Although you would be hard-pressed to find many people who would turn down the chance of receiving a substantial sum, the decision to transfer out of a final salary scheme is not an easy one.
I had a client who was looking forward to an annual pension of £29,000 from age 65 and a tax-free lump sum of just under £90,000. Having just turned 62, he decided to request a transfer, having heard rumours about generous transfer values. He was delighted to tell me about his “life- changing” offer of £975,000 – nearly 34 times the annual pension value.
The client considered the cash transfer value to be life-changing because:
As the transfer value was in excess of £30,000, the client was legally obliged to obtain advice from a suitably qualified pension transfer specialist. This became extremely important as the process became much more complex than he first thought.
Through effective planning and guidance, we concluded that the transfer was viable and would enable the client to achieve his financial goals. It would allow him to live the life he loves and give his grandchildren the best start to life.
To find out more about transferring a final salary scheme, why not download our guide?
While on the surface a transfer value might look a great financial opportunity, it is vital that you seek advice to see if it this is a good option for you. Many people approach retirement with little or no idea how much money they will need or the best way to take an income, but we’re here to help. Our financial planners can give you the answers and show you what your retirement finances could look like – then create a plan to make sure you are on track.
Speak to a Tilney financial planner without obligation by booking an initial consultation on our website, calling us on 020 7189 2400 or emailing firstname.lastname@example.org. We can visit you at your home or local Tilney office, or contact you over the phone.
This case study is based on a real Tilney client situation. Personal details have been changed for anonymity.
Before you consider transferring a pension, it is important to ask yourself: Will I lose any valuable benefits or features from my existing pension plan? Will I incur any penalties on my existing pension if I transfer? Is it an occupational final salary pension scheme? (in which case it is very unlikely to be advisable to transfer) Have I considered the charges on my current plan? (a new arrangement may be more expensive – especially if you have a stakeholder pension).