So far over £50 billion has been removed from financial salary pensions since April 2015. By doing so many have given up the security of a guaranteed inflation-linked pension.
Savers are quitting their Defined Benefits pension scheme as they are attracted to the massive transfer value. A transfer value is the amount of money you are offered to leave. One pound in a final salary scheme can be worth as much as £40 in retirement because of the way pension payouts are calculated. This has come about because of bond yields are presently low. Bond yields are the investment that pension funds liabilities are valued against.
Often people are ignoring sound financial advice. Because the sum involved seem large people are forgetting that the money needs to last at least thirty years.
The Financial Conduct Authority (FCA) found some people putting their pension into cash savings accounts, even with low-interest rates, because they mistrust the system.
Care should be taken that you do not make yourself ineligible for state benefits by deliberately running your assets down. This is called deliberate deprivation.
There is no greater financial security than knowing you will receive a set retirement income for life. Historically the only time you would look to transfer was for reasons such as ill-health, limited life expectancy when you would not receive the pension.
A key consideration for many people is that by transferring your defined benefits fund to a defined contribution (DC) means you can leave the pension invested and pass it on to their children. This may be key if you have other sources of income in retirement.
The “Pensions Protection Fund” is a body that rescues distressed schemes and will guarantee most of your pension fund.
The above article should not be seen as financial advice but as a starting point. Everyone’s financial situation is different. At Anstee & Co we are independent financial advisers (IFA) offering unbiased advice. The first meeting is free. Our financial advisers cover Northamptonshire, Lincolnshire and Bedfordshire. We have offices in London, Birmingham, Stamford and Kettering. We also make use of meeting rooms in Wellingborough, Northampton, Towcester and Bedford.
Meetings can also be arranged at your home or place of work at a time that is convenient for you. Why not contact us today to see how we can help you.