A Final Salary (or Defined Benefit) Transfer involves exchanging your pension entitlement for a cash lump sum which must be put into a registered, or HMRC recognised, pension scheme. The FCA and The Pensions Regulator (TPR) believe that it will be in most people’s best interests to keep their final salary (DB) pension.
You choose investment funds that match your objectives, attitude to risk and set the income you want. The income you receive may be adjusted periodically depending on the performance of your investments.
Once you’ve taken your tax-free lump sum you can start taking income right away or wait until a later date.
There are number of advantages to transferring your final salary pension into drawdown, but there are also some disadvantages, for example you are giving up a guarantee but gaining the ability to pass money onto your loved ones on death.
Working with a suitably qualified Adviser to understand both the advantages and disadvantages of final salary transfers and whether they are right for you is extremely important.
If you take advice with us, we will give you one of two outcomes:
In order to provide advice on Financial Salary Transfers, advisers must hold The CII Certificate in Pension Transfers (Formerly Advanced Financial Planning Certificate "AF3 Qualification" and before that "G60"). At The Pension Drawdown Company we offer the professional services of four Financial Planners holding this prestigious qualification (meet the team).
Both options are provided for comparison, each have their benefits and which one is appropriate in meeting your long term needs depends on your personal circumstances.
Comparisons based on typical Final Salary Schemes we have advised on going into Pension Drawdown
Upon transferring out your final salary scheme, for most people, we believe that ongoing advice is vital to support your plans and evolving circumstances.
This may not be the case if you are merely in a workplace pension scheme.
Your relationship with your advisor is a key part of feeling confident about your pension and making sure you continue to be correctly invested. It is important to remember that markets go down as well as up and that the value of your fund may go down and up as a result. Your advisor is there to make certain you understand the risks of investing and ensure you are invested at a level that is commensurate with your attitude to risk.
Following your initial enquiry, we will provide you with guidance to give you enough information about safeguarded benefits and flexible benefits to enable you to make a decision on whether to take advice to transfer your final salary pension. At this stage, it is factual information only and is not advice itself. There is no charge for providing this information.
This is a shortened form of advice and will be provided by a pension transfer specialist. It will involve gathering information from you by way of a fact find document. The good news is, we will be allowed to tell you if transferring your Defined Benefit pension is a bad idea and that we do not recommend it. And we can still do this for free.
There will one of two outcomes from abridged advice:
Provide you with a personal recommendation not to transfer or convert
Advise you that it is unclear whether you would benefit from a pension transfer or conversion based on the information collected through the abridged advice process.
Currently, we do not charge for providing abridged advice
In the event of the latter ‘unclear’ outcome, to find out if a transfer is then likely to be in your best interests we need to proceed to the full advice process, where we can carry out a full analysis, but whatever the outcome, you will have to pay our full fee. Obviously, you can choose not to proceed to full advice, in which case no fee is paid.
Here we would establish full personal information, scheme information and objectives. Check ceding scheme details for any transfer penalties and/or special enhancements that could be lost on transfer. Advise on an appropriate solution based on this. We will do cashflows and take into account tax and investment considerations; include Transfer Value Comparator (TVC) and Appropriate Pension Transfer Analysis (APTA) comparisons.
At the end of this process we may still recommend that you DO NOT TRANSFER out of your DB scheme. Our initial fees for providing full advice are set out below, please note that these will apply in full regardless of the full advice outcome – whether it’s to transfer or not to transfer.
With our full advice service, we will provide you with a written suitability report detailing the reasons for our advice. It will specify your demands/objectives and needs and highlight what is important to you. It will also set out possible disadvantages of any course of action. Our aim is to produce a report that stands the test of time and tells a story in ‘plain English’ about how the recommendation endorses your retirement plans.
Fees and transfer criteria:
Triage and abridged advice – no fees
Full advice – 2% initial, minimum £2,500 applicable in full regardless of the full advice outcome – whether it’s to transfer or not to transfer.
Minimum pension transfer value, £200,000.
We can only advise you if you are a deferred member of your DB scheme. So, if you are already an active member of your scheme, we are unable to advise you to ‘opt out’. Minimum age: please discuss your individual circumstances with us.
As Pension Drawdown Company proudly subscribe to the PFS’ Pension Transfer Gold Standard, we have committed to considering whether there are any likely conflicts of interest inherent in how we advise on Defined Benefit Pension schemes. We will only recommend a Pension Transfer where we believe this is in your best interests and follow regulatory requirements and industry best practice to form our advice. We will only recommend ongoing services where we consider this is important/beneficial to your ongoing financial health.
We offer Triage / Abridged advice at our cost and will only supply chargeable services where following Abridged Advice, we believe it is not clearly in your best interest to leave your Defined Benefit Pension in place. This does mean there is potentially a benefit to the firm to progress to providing chargeable services. However, to ensure our processes and advice is aligned with our clients’ best interests the firm has adopted the following measures:
Where any Conflict of Interest is identified, the firm will consider if any measures can be taken to manage the Conflict, and where we believe there is any risk to our clients from the conflict, we will tell you about this and discuss whether and how we should proceed.
So if you would like to find out more or review your own position
please contact us by email or call us on