What is a final salary pension transfer?
A final salary pension is what you receive after you retire. It varies for everybody and is based upon your salary at the time of your retirement, the number of years you have worked for your employer and contributed towards the pension fund and the pension fund’s calculation rate for your salary upon retirement (also known as the accrual rate).
Sometimes a final salary pension is known as a work or career average pension which is based upon the average salary you received from your employer throughout your working history.
A final salary pension offers a guaranteed set income from the date of your retirement to the date you die. This is index-linked to current inflation rates. This not only provides security and guaranteed income to you throughout your retirement, but it can also provide for your spouses and loved-ones.
You should very carefully consider whether transferring out of a final salary pension is right for you. It is usual for your pension fund adviser to provide to you a statement setting out your cash equivalent transfer value (CETV).
This sets out what your pension fund amount is each year and is the value of your pension fund should you wish to transfer it or take it out (if of retirement or pension age).
Is a Pension lump sum tax free?
It is possible for you to take up to 25% of your pension fund as a lump sum, tax-free. However, the remainder of your pension pot will be taxed according to your individual personal tax allowance per year.
Can I get a lump sum from my SIPP?
A SIPP is a self-invested personal pension.
It is possible to take a lump sum of up to 25% of the pension pot tax-free, just like with other personal pension plans you may have.
Do my Pensions work for me?
To determine if your pension(s) are working for you, you will need to consider some of the following points: –
- Check what type of pension you have i.e. a SIPP (Self-invested personal pension), a Defined Contribution Pension, employer pension;
- Check the benefits of the pension plan scheme, such as being able to take tax-free lump sum payments, whether there is an option to increase/invest further, whether you could be receiving 20% extra contributions from the Government towards your pension pot;
- Check how much money/income or lump sum you would need from your pension fund in order to be able to retire. Would your pension fund, in addition to your State Retirement Pension, enable you to continue to meet all your, and/or your dependents outgoings after retirement?
Was I Mis-sold my Pension?
The main mis-sell with any pension will depend upon the advice you received from your pension provider and whether they shopped around the pension plan products available to you.
In particular, the “enhanced” nature of a pension annuity upon retirement is a particular area where mis-sale can occur.
This is because the adviser will have had to have taken into account any existing medical conditions that you have, which would affect the type of annuity you would take. If you have an existing medical condition that is deemed to reduce your life expectancy, then you would have expected to have received advice about your pension plan provider topping up your income to factor in your shorter life expectancy.
If you are concerned you did not receive full advice regarding your pension plan then it is worth getting the advice that you received checked to make sure it is right for you.
We would be happy to assist you on our no win, no fee plan. If we are successful on your behalf, our fees are 24% of the funds you receive (20% plus VAT).