Our pension advisers at Free Pension Advice can support you with your defined benefit pension (also known as Guaranteed Minimal Pension – GMP – or final salary pension) questions.
With an estimated £410bn shortfall in defined benefit pensions you may be considering your retirement and pensions. We review personal and financial circumstances, alongside the pension scheme benefits, when assessing your options because these will be instrumental in helping determine the best advice. Our advisers want to be recommending the best advice so whatever the advice we will explain our reasoning.
Defined Benefit/ Final Salary Pensions Explained
At Free Pension Advice we want to ensure you’re empowered with the necessary information to understand and make financially savvy decisions. Whilst pensions can seem complicated, good pension advisers are able to convey the information and provide tailored support.
A final salary or defined benefit pension differs from a private / defined contribution pension because it often offers you a fixed amount of money for life, alongside other benefits. These benefits may allow your family to benefit from the pension too.
Defined benefit pensions are declining in popularity by employers because they’re expensive to administer, among other reasons. Solvency of some schemes has been questioned and flexibility to access the funds is more restrictive, which can often lead people to consider switching.
Knowing whether it’s the best advice to transfer your defined benefit pension requires a qualified, regulated pension adviser to conduct a review of your circumstances.
Free Pension Advice & Reviews
Where possible we always want to give you free pension advice and when charging is required, we explain this in advance. Regulation means that we can talk to you about your pensions and offer the positives and negatives of conducting a review. If you have a question about your defined benefit pension we would be happy to help. If we were to conduct a review of your defined benefit pension we would be required to charge for our service. Historically we’ve conducted the review for free, however new regulatory changes mean we’re not permitted to do this anymore. The review would take around 10 hours to conduct a full analysis, albeit we can wait weeks for the pension scheme to send the necessary documents.
If you would like to speak to a qualified pension adviser we would be delighted to offer you support and guidance.
Why Would You Want To Transfer Your Defined Benefit Pension?
The reasons for transferring your defined benefit pension vary, what’s important is that you receive advice prior to the transfer to ensure the financial decision will not be detrimental to your future. After a pension is transferred out of a final salary/ GMP / Defined Benefit scheme you cannot reverse the decision.
Most commonly, the reason people enquire about transferring their defined benefit pension are:
- The scheme benefits are too restrictive and they wish to have better control over their retirement income
- Health concerns mean that financially you’re better moving the money to a private pension where the money is guaranteed to be passed onto your family
- The scheme benefits are not a factor as you aren’t married / have children
- Insolvency concerns over the defined benefit pension
- You wish to access your 25% tax free allowance
It’s important to know that not all defined benefit pensions will be suitable for transferring. If it’s not recommended to transfer we will explain in detail why we’ve come to that conclusion. We work alongside you to help you achieve your objectives and
Not Sure About Your Pension?
If you’re unsure about whether you have a defined benefit / final salary pension then get in touch today. We can quickly identify what type of pension you have and discuss the benefits and negatives.
Speaking to our pension advisers is free and unless we’re providing any transfer analysis or investigating the pension scheme benefits there is no cost.
When Sarah* called us to discuss her defined benefit pension she knew she wanted to transfer her pension. There were various reasons Sarah wanted transfer out her defined benefit scheme, but the two main reasons were health and flexibility to access the funds within her pension.
Sarah was 59 and had been diagnosed with a heart condition. Sarah also had three children in their late 20’s / early 30’s. Sarah requested her transfer value (£317,000) and asked for our support to help her assess the transfer options.
We conducted a full review of the personal and financial circumstances and determined that it would be in Sarah’s best interests to transfer her pension. The scheme rules meant her family would not benefit from the defined benefit pension, which was a contributing factor following her diagnosis.
We presented our findings to Sarah who spoke all the options over with her family and then requested our advisers to start the pension transfer. Sarah plans to continue working for as long as possible.
Following the transfer we asked Sarah for her comments on the process:
“It’s a weight off my mind knowing the pension won’t just disappear if I die early… obviously I’m not intending to go anywhere but you never know. It’s good to know my family will get the money. I’m going to take some of my tax free cash and go on a cruise – I’ve never done one and have anyways wanted to try it!”
Final salary pension transfers are not suitable in every circumstance and where they are, can take 3-6 months to conclude. We will always explain the positives as well as negatives to the transfer solution because it can be detrimental to your retirement planning.
*We’ve changed the name of the individual to protect the client’s privacy.
We work with advisers and intermediaries across the UK to assist people in need of advice for defined benefit pensions. Our advisers are fully qualified to advise, transfer and manage defined benefit pensions. All advise and services are carried out in-house.
If you are an accountant, solicitor or financial adviser with a client requiring defined benefit advice we can support you and your client. Please call to find out more about our service.