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Should you transfer out of your final salary scheme?
21st January 2018
Individuals are being warned to ignore vulture advisers hoping for rich pickings from employees looking to transfer their defined benefit (also known as final salary) pension scheme, especially in light of ‘high’ reported transfer values. Sally Hamilton, The Daily Mail, asks Jonathan Watts-Lay, Director, WEALTH at work about this.
He responds; “I have seen offers to transfer the equivalent of 40 times a worker’s retirement income. So someone expecting a £20,000 annual pension may be tempted by the offer of an £800,000 lump sum.”
But Watts-Lay warns; “The disadvantages include giving up guarantees, a loss of inflation-proofing and benefits for a spouse after death.”
Watts-Lay says a compromise that is available to some people is to take a partial transfer – offered by around 15% of schemes – adding; “You can have your cake and eat it, but it is not widely available.”
To read the full article in The Daily Mail, please click here.
Transferring from a defined benefit pension scheme can mean that you will be giving up valuable guaranteed benefits and you might find yourself worse off. There are many things to consider. Read our checklist here.
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