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Client Exchange

Final Salary Pensions

Margaret meeting

Brighter Financial Services Limited have been granted authority by the FCA to provide transfer advice on final salary pension schemes. This status can be identified at the FCA website

A Final Salary Pension scheme is one where the amount you have been offered in retirement is guaranteed. The benefits that these schemes offer often outweigh the benefits of transferring out of such schemes. However, with current low interest rates, pension transfer values can be very high and for some people there is an advantage in transferring funds away from DB schemes. We are advising people who hold a final salary pension scheme to contact us for a pension review. Strike while the iron is hot

A transfer out of a Final Salary Pension scheme could be for a number of reasons. Here are a few:

  • Poor health, with a reduced life expectancy
  • Requirements for an increased tax-free lump sum at retirement
  • The purchase of premises for a business
  • Being single, divorced or co-habiting
  • Providing an inheritance for loved ones under pension freedoms.

A Final Salary Scheme is index-linked (which means that it increases with inflation). At retirement you will have the choice to take the pension as annual income or as reduced income, if you choose to take some of the pension as a tax-free lump sum.

If you have worked in the public (or private sector) where a Final-Salary Pension scheme was offered you may be eligible to consider all options at retirement, including a transfer-out of the scheme.

What we will do………

  • We will ask all new clients to complete a short questionnaire to highlight whether a final salary pension review is right for them
  • All new clients are provided with information about how we will work with you. Terms of business for Final Salary Pensions.
    We ask that our clients agree to these terms by signing declaration part 1, before we proceed with any business on your behalf.
  • With your consent we can approach the administrators of your final-salary pension scheme to obtain a CETV(Cash Equivalent Transfer Fund).
  • We can then carry out a detailed analysis to determine additional growth that may be secured with your investment, matched against any risk.
  • Advice that we provide will take account of the guarantees offered by final salary pension schemes, the requirement for flexibility to meet personal needs/goals, the potential additional growth in investment that a transfer out could achieve and the risks that may be involved in taking the course of action.
  • We may or may not advise on transferring the pension out of a final-salary scheme. Our advice will depend on all the factors outlined.
  • We strongly urge our clients, with these schemes to explore all options.

If you are close to retirement, have a Deferred Final-Salary Pension or a combination of personal pensions and a final salary scheme; accessing your retirement funds needs careful consideration and seeking advice from a qualified adviser, holding the right pension qualifications, is invaluable.

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