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Have you got a final salary pension or a defined benefit pension scheme?



Posted: December 5th, 2016

David Allen

If yes then are you taking advantage of the latest pension freedoms introduced to provide greater flexibility?

Low Government bond returns and the appeal of the new pension freedoms legislation may mean you can benefit from transferring out of your existing final salary pension or defined benefit pension scheme.  However, giving up what historically has been classed as a ‘gold plated’ solution for those planning for their retirement is a significant decision, so much so the Government insists that you seek financial advice where the total value of your pension fund is in excess of £30,000 and you’re considering transferring out.

From April 2015, pension freedoms have given those aged 55 and over full access to their personal pension or money purchase pots with the first 25% being tax-free.  What was previously deemed as ’unthinkable’ is now a viable alternative for individuals with a final salary pension or a defined benefit pension scheme.

Following Brexit and the reductions in Government bond and gilt yields, the last 12 months has seen transfer values from final salary pension schemes increase significantly.  Low interest rates and falling gilt yields has increased the overall cost to employers in providing such benefits to existing members, and in turn has prompted them to offer much improved transfer out values compared to what we have seen in previous years.

Swapping a guaranteed pension income for life for an investment where the return is dependent on external markets and personal investment choices is not the right decision for everyone.  However, for some, a transfer out will provide a lot of financial sense, effectively giving control to the individual of what is a significant asset and allowing them more flexibility in how they can then use their funds to secure their future and crucially their family, with death benefits not being solely restricted to their spouse or indeed subject to inheritance tax.

Given the complexities of providing advice in this area, not all financial advisers are authorised to do so.  At David Allen Financial Services as well as offering a free initial meeting to discuss your options, we will then  provide a detailed, tailored and impartial recommendation to you, and as part of our ongoing service we will review our recommendations going forward if either your circumstances or legislation changes.

We are proud to be Independent Financial Advisers, searching the whole of the market so you don’t have to.  With no product and provider bias you can be rest assured that your retirement aspirations are our goals to achieve as well as yours.

Let us review your existing final salary pension or defined benefit pension scheme and discuss the options available to you.  Dig out your paperwork and contact us on 01228 711881 to arrange your FREE no-obligation review.