- Consider your options. Due to the pension changes in April 2015, there has been an increase in final salary pension transfers. However there are various risks involved meaning it is vital to consider all your options.
- Scam schemes. If you are looking to cash in on final salary pension be aware of scams by advisers who aren’t doing full transfer checks. Make sure you speak to your adviser and check they have a vigorous review process.
- Consider what you’re leaving. A good question to ask yourself is “why do I wish to give up an index linked income stream that I cannot outlive and that goes to my spouse at 50% should I die?”
- Understand the risk. Transferring your pension is a risk due to final salary pensions schemes mitigating many risks of retirement. However if you transfer out the risk is now yours.
- Your current health. If your life expectancy is reduced then the opportunity to spend more income in the early years via flexi-access might seem more attractive which cannot be achieved through the inflexibility of a defined benefits scheme.
- Your marital position. Many schemes will pay 50% of your pension to the spouse on death, for single or divorced members this has no value, however, the transfer value includes the cost of providing spouses benefit and therefore can be realised to the member on transfer.
- Do you have other assets, other income and other pensions? If you aren’t dependent on the final salary pension as your only income in retirement, then a pension transfer may be a legitimate option.
- What is your current expenditure? An increasing income in retirement from a final salary scheme may be more beneficial for those who have a higher expenditure than someone who has a smaller expenditure.
- What is your current tax position? Another benefit of final salary transfer is that it gives you the ability to take income as and when required which might allow you to mitigate income tax.The ability to receive 25% of your pension tax free is a huge factor.
- Ensure you get the correct financial advice. You gain complete flexibility and control of you pension when transferring, however as outlined there are a number of risks, be sure to seek advice form advisors with your best interests in mind.
At Advies Wealth we offer you a FREE consultation to discuss your pension transfer with an expert. This will explain the process, as well as, the pros and cons of transferring your pension. Book yours now.
