If you’ve been a member of a company pension scheme in the past, it may have been a Defined Benefit arrangement, which should provide a future retirement income that’s based on your length of service and your salary. Defined Benefit schemes are normally considered to be the most attractive type of company pension scheme because they offer significant guarantees of future income.
But for some people approaching retirement it can be appropriate to transfer the value of a Defined Benefit pension into a personal pension plan. Importantly, those transferring will lose these valuable guarantees but in compensation for this they can gain extra control of how and when they take their pension benefits. Furthermore, the value of their pension transfer can be very significant, and a personal pension fund can better be protected for your children and grandchildren.
Unfortunately, some Defined Benefit pensioners have in the past been given bad advice to transfer their pension to a personal pension, and this has been widely reported in the press. As a result of the general negativity surrounding Defined Benefit pension transfers, many financial advisory companies have taken the decision not to offer advice in this crucial area.
However, Four Oaks Financial Services remain happy to review pension options for clients who have built up future Defined Benefit pension entitlement. We have robust internal processes to ensure that the right advice is given, and as part of the Quilter network who came first in the FTAdviser 2019 top financial adviser awards, all our pension transfer recommendations also benefit from Quilter’s experts giving our recommendations a secondary check prior to any transfers taking place.
We remain of the view that, for the majority of people, the right advice is to stick with their Defined Benefit pension. However, for some people there can be considerable merit in transferring. Our expert advisers at Four Oaks Financial Services are available to give advice in this important area. Please contact us for financial advice in Sutton Coldfield and across the wider Midlands region.
Transferring out of a Final Salary scheme is unlikely to be in the best interests of most people.
However, there are some circumstances where we might consider a Defined Benefits transfer.