If you have a final salary pension scheme you be considering whether you should transfer it, there are pros and cons for transferring your final salary pension. It is advisable to seek independent financial advice before making any changes. Getting financial advice will ensure you are making an informed decision and making the best decision based on your circumstances and financial goals.
If you would like to speak to an independent financial adviser about your final salary pension and whether it would be beneficial for you to transfer it, we can help you find pension advice in Essex. All the financial advisers we recommend are experienced in all aspects of pension advice and are approved by the FCA.
Benefits of a Final Salary Pension
Remaining in your final salary pension scheme can offer many benefits, including:
- Your pension pot is based on your final salary and does not rely on the performance of the stock market.
- Your pension will rise in line with inflation.
- Your spouse or civil partner will usually be eligible for a spouse pension if you die, although this may not be the full amount of your pension.
Pros of a Final Salary Pension Transfer
The reasons for you considering a final salary pension transfer will be personal to you and your financial goals and seeking independent financial advice can help you determine whether it is right for you. Here are some of the pros for a final salary pension:
- Greater flexibility – after you have transferred your pension you can withdraw money from it whenever you want to, you no longer have to take your pension pot as a regular income.
- More tax-free cash – this will depend on the type of transfer, but you may be able to take a larger amount than the current 25% as a tax free lump sum.
- Leave money to your family after you die – while your spouse or civil partner may get a spouse pension when you die. If you transfer your pension, you can leave the money from your pension to leave to family as inheritance.
- Poor health – if you are in poor health a final salary pension transfer could give you a larger sum of money. When you transfer your pension the amount you can transfer is based on how long the average person will live and does not take into account the status of your health.
- Remove risk of employer going bust – although your final salary pension would be protected by the Pension Protection Fund if your employer went out of business. It is not guaranteed to pay your full pension and is more likely to pay a percentage.
Cons of a Final Salary Pension Transfer
Just as there are pros of a final salary pension, there are also cons. It is imperative that you seek independent financial advice before making any changes to your pensions to ensure you have the most effective strategy in place. The cons of a final salary pension transfer include:
- Could be risky – a final salary pension provides a guaranteed income for the rest of your life, if you transfer your pension you could risk running out of money in your retirement.
- No inflation protection – without a final salary pension which rises in line with inflation, you could risk having less income in your retirement.
- Become reliant on investments – if you transfer your pensions you may increase your level of risk if invested on the stock market to provide an income for your retirement.
The financial advisers we recommend are experienced in retirement planning and regularly work with their clients to provide support and guidance on all aspects of pension advice in Essex. Our financial advisers will work with you to determine which pension plan is best suited to your circumstances and will provide sound retirement planning advice.
At Pensionadvice.org we can help you find a FCA registered financial adviser for pension advice in Essex. All of the financial advisers we recommend offer bespoke financial advice that is tailored to your unique personal circumstances.