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Assess your Defined Benefit/Final Salary Pension Schemes

New figures last month showed six million people with defined benefit/final salary pensions have seen their transfer values increase in the last year mainly down to interest rates remaining low (reason being is that the transfer value needs to be higher to buy an annuity of worth in the open market). Under the rules of most defined benefit/final salary schemes, workers have the right to swap their pension entitlement for money. With a rising defined benefit/final salary pension worth, some individuals are being offered 'eye-watering' sums, often tens of thousands of pounds more than a year ago, to trade in their scheme for cash.  For someone with a pension income worth £20,000, it is not uncommon to be offered 30 times that amount - in other words, £600,000 in cash.

Even though transferring your pension can offer a more flexible retirement, extra tax-free cash and further inheritance tax relief, individuals are being warned that this may not be the most suitable option, as defined benefit/final salary pension schemes can offer the luxury of greater certainty, inflation protection and risk-free income. If your transfer value is above the lifetime allowance of £1m, further income protection is available, through taking out individual HMRC protection schemes.

If you would like more information regarding your defined benefit pension schemes and the most suitable course of action, please contact us immediately.
Location: St Nicholas Court, Church Ln, Dersingham, King's Lynn PE31 6GZ, UK

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