Defined Benefits Scheme- What should I do?

Many people with defined benefit schemes are looking to take advantage of the current high transfer values, and transfer the funds to a personal pension. With the new flexible pension rules, there is a clear attraction to higher tax-free cash allowances, earlier access, greater income flexibility and potentially greater death benefits available to beneficiaries. Great care should be taken though.

Many people with defined benefit schemes are looking to take advantage of the current high transfer values, and transfer the funds to a personal pension. With the new flexible pension rules, there is a clear attraction to higher tax-free cash allowances, earlier access, greater income flexibility and potentially greater death benefits available to beneficiaries. Great care should be taken though.

Whilst the transfer values are high, defined benefit schemes contain valuable guaranteed benefits, an inflation linked income for life without investment risk, that once transferred cannot be reclaimed.

It is important to consider your options carefully, in particular to assess how comfortable you are with investment risk. Decisions should be based on wider personal circumstances, what other assets and investments you may have, and how reliant you will be on the income in retirement.

You should seek appropriate independent financial advice. The review and potential transfer of a defined benefit pension scheme is likely to be the largest value financial decision most people will make.

To stop people transferring without considering the lost benefits and their own circumstances fully, the financial services regulator, the FCA, insists that for transfer values above £30,000 advice must be sought from a suitably qualified financial adviser. Without this advice, a transfer cannot be undertaken.

If you would like more information please contact Gareth Rose at grose@sedulo.co.uk or call 0161 236 9077

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