If you have desires to manage your own investments and be able to pass on to beneficiaries of your choosing, then managing what you invest and how you invest allows you to build on your pension fund your way.
Your pension, your timing. You may want to take your pension earlier than the scheme age, without incurring penalties. Transferring out of a defined benefit scheme and drawing earlier could save you 3% to 5% per annum on penalties. Or, you may want to defer taking your pension post retirement age to preserve the pension for future generations. A final salary transfer will help you achieve this.
You choose how much or how little you need with your own plans. Supplement current income by phasing your retirement in stages, taking a larger tax free cash lump sum, and choosing the level of income you need from it, are all possible when you transfer out. The choice is yours.
Alex had a pension from his banking days which, for him, no longer met his requirements. He did not need to rely on this income for his retirement plans and felt that in its current form, he lacked the control and flexibility he wanted.
If you find the option to draw a much larger tax-free cash lump sum appealing, then moving from a defined benefit pension may suit you. Extra tax-free cash entitlement from a Final Salary Transfer scheme allows a more generous pay out.
Defined benefit schemes are based on the assumption that everyone in the scheme is married and takes no account of your child or marital status. Transferring gives you the advantage of passing the full fund value to beneficiaries outside your estate.
If your employer becomes insolvent, the pension is transferred to the Pension Protection Fund that may restrict your pension to a maximum of £33,678 or 90% of the pension if lower.
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