Final salary (or defined benefit transfers)

There is much more interest in final salary transfers because of the pension changes introduced in April 2015. The reason for this is that it is possible for many people to transfer out of a final salary scheme into a defined contribution scheme in order to take advantage of the new pension rules full access to a pension fund. 

There are some advantages in transferring out. Such as:

  • It gives complete access to the transferred value of the fund
  • It could give greater tax-free cash
  • It can become a pension that can be passed on to children
  • You can choose how the benefits are taken 
  • You could buy an annuity with the proceeds - taking advantage of the various options they give
  • It can allow you to take benefits from any age after 55 (rather than restricted to the final salary scheme rules.
  • Transfer values are quite high because of low gilt yields 

Of course, there are some disadvantages to taking a transfer value:

  • You lose all of the guarantees attached to the scheme
  • If you take a transfer, then if it is invested,  this becomes your risk
  • You will lose any benefits under the Pension Protection Fund (a backup scheme if  the final salary scheme fails)
  • You have no real involvement in the managing of a final salary scheme
  • There are no explicit costs for you under a final salary scheme
  • It is probable that the final salary scheme provides inflation protection
  • It is probable that the final salary will have inflation proofing
It is possible to transfer out of most final salary schemes.
It is not possible to transfer out of a final salary scheme if it is being paid. It is also not possible to transfer out unfunded government schemes to schemes which offer flexible benefits, such as the pensions of the:
  • NHS
  • Teachers
  • Police
  • Armed forces
  • Civil service 

However, local authority pensions can be transferred.
The starting point for any transfer out of a final salary scheme, is that it should not be transferred, unless there are some very sound reasons to do so. 

If you can't find the information you're looking for on the website, or you want to know more or have a question, or just want to chat through some details about your pension then please feel free to contact us, without obligation. Either contact us online or call 0800 011 2713.


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