Final Salary Transfers | Pension Drawdown Company

Final Salary Transfers

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.

  • If you are aged 55 or under -> you can transfer into a Personal Pension Plan and invest in one or more funds in line with your objectives and attitude to investment risk. At age 55 you can then move into Flexi-Access Drawdown (Pension Drawdown) or purchase an Annuity.
  • If you are aged 55 or over -> you can transfer into Flexi-Access Drawdown (Pension Drawdown). You can choose to take up to 25% (a quarter) of your pension pot as a tax-free lump sum. The rest is then invested in one or more funds within your pension, and you are able to take a taxable income at times that suit you. Typically, people use it to take a regular income.

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.

We have been advising clients on Final Salary Pension Transfers since 1999 and are specialists in this field.

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).

Factors to consider when deciding whether a Final Salary Transfer is right for you.

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.

Factors to consider
Final Salary
Transfer/Drawdown
Family
Protection
& Inheritance
Spouse receives 50% of annual pension and
small allowance for children under 18 or in full
time education.
Spouse receives 100% of fund and can be
passed on to children in entirety. Outside of
inheritance tax.

Income
Guaranteed index-linked income for life from
retirement age (usually 60 or 65)
Income taken when required from age 55.
Can be tailored to your needs and tax-efficiency.

Control

No Control by scheme members
Ability to take control of your entire pension
and determine how it is invested, drawn and
passed on.

Capital Value

Only realisable if exiting the scheme
Significantly higher transfer values than usual
currently being seen. This is partially due to
low gilt rates and can change.

Flexibility
Benefits, including the tax-free lump sum, can be
deferred until required.
You can alter your investment strategy and the
amount and frequency of your tax free lump
sum and income.

Comparisons based on typical Final Salary Schemes we have advised on going into Pension Drawdown

Upon transferring out your final salary scheme, make sure you receive ongoing advice

Your plan and funds need ongoing management to continue to support your evolving circumstances.

We do not charge you unless you decide to go ahead
with our recommendations.

Should you decide not to go ahead, we will not
charge you for any time up until that point.

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.

> Please click here for more information on the Advantages and Disadvantages of Final Salary Transfers.

Learning about your options all starts
with a free no obligation chat.

So if you would like to find out more or review your own position
please contact us by email or call us on

0800 03 04 008

Risk Warning exclamation mark icon

This guide should not be construed as individual advice to transfer out of a final salary pension scheme. Pension transfers are relatively complex and irreversible transactions and it is both imperative and a legal requirement to seek advice from a suitably qualified adviser before accepting a transfer.

Always remember the value of investments and the income they produce can fall as well as rise and you might not get back all your initial capital. This document has been produced based on our understanding of current pension rules and pension tax treatment. These do change from time to time.

Risk Warning exclamation mark icon

This guide should not be construed as individual advice to transfer out of a final salary pension scheme. Pension transfers are relatively complex and irreversible transactions and it is both imperative and a legal requirement to seek advice from a suitably qualified adviser before accepting a transfer.

Always remember the value of investments and the income they produce can fall as well as rise and you might not get back all your initial capital. This document has been produced based on our understanding of current pension rules and pension tax treatment. These do change from time to time.