Churchill Wealth Management
Final Salary Pension Transfers
In recent years there has been an increase in the number of pensioners who are considering a final salary pension transfer.
Although historically this was largely considered to be imprudent, there have been significant changes in legislation and economic conditions, both of which has strengthened the case for a final salary pension transfer under certain circumstances.
A final salary pension transfer is the process of exchanging the income stream your company promised you for your retirement for a lump sum and this can be invested into a personal pension or SIPP. This gives you more control over the manner in which benefits are taken, but the guarantee of a specific level of income is lost. Below is a summary of some of the advantages and disadvantages associated with a final salary pension transfer.
A final salary pension is a guaranteed pension income, based on a factor of your final salary with your employer. They are obliged to pay you a specified level of income for your retirement and this usually increases with inflation and will ordinarily pay a spousal pension of a half or two thirds of the income you receive if you die before your partner. These are valuable benefits as regardless of how long you live, the pension will still be paid. Unfortunately should you and your spouse die early in retirement, none of the remaining benefits can be paid to a beneficiary.
Alternatively, most pension scheme administrators will offer a one off lump sum payment into a personal pension or SIPP to replace the guaranteed income in retirement. A great many pensioners have been taking advantage of very high transfer values over the last 12 months due to falling bond yields. This coupled with pensions freedom means that should you die, it will be possible to pass on most of the value remaining to a beneficiary. There is also a great deal more flexibility with how the benefits are taking during your retirement.
Whatever your position, a final salary pension transfer should not be carried out without careful consideration and without consulting a pension transfer specialist.
At Churchill Wealth Management, all our advisers hold pension transfer specialist qualifications and we are happy to meet clients at our office in Clifton or at their home and offer a free initial consultation.