You may have read a lot in the press about the rising amounts people are receiving for transferring from an end of salary pension to a private pension; BUT, is it the right decision for everyone?
Make sure you read our view on "the pension transfer boom" and make sure you understand all aspects of what a pension transfer could mean for you.
What exactly is a pension transfer?
A pension transfer is the transferring of a pension pot that is currently within a final salary scheme (other wise known as a defined benefit benefit schemes) in to a private pension scheme.
Rather than receiving an annual amount from your pension scheme a sum of money, usually a rather large amount, would be transferred in to a private pension scheme for you to either leave in a different scheme or withdraw amounts as you please.
Most final salary schemes are more than generous so what could be the reasons why some people are choosing to transfer from a scheme that will provide a fixed income upon retirement to a private scheme where you would have to manage your funds annually?
The main reason? this is due to changes in the law that came in to place in April 2016 changing the 55% tax you would previously pay passing down money from pension pots invested in income drawdown schemes to nothing should you die before the age of 75 and the normal rate of income tax thereafter.
Is Transferring right for you?
If you have heard anything about pension transferring it is important to understand that this decision may not be suited to most. Here are some things to consider if you have thought about transferring your pension:
- Would you be comfortable in managing your own funds annually as apposed to knowing you will be receiving a fixed annual amount from your pension scheme?
- Do you have a need for the transfer value? Do you have a real need to transfer your pension scheme giving you a large sum of money? Make sure you consider this carefully.
What to do if you have been thinking about transferring?
The first thing you must do if you want to know more about transferring is speak to a financial adviser who is qualified in this area. It is government legislation that any scheme that is worth more than £30,000.
Not every financial adviser will be qualified to assist in this specialist area as permission to perform this type of transfer can only be done by advisers with special permission from the FCA.
Plan-to-retire is a pensions transfer specialist in Doncaster that can assist you with guidance and in depth specialist pension advice that is tailored to your specific circumstance.
We are able to work alongside you in assessing not only your current situation but also helping you understand the financial needs the retirement you want to live will require.
contact us today for specialist impartial advice in relation to your end of salary pension scheme to better understand if the decision could be right for you.