Pension Transfers and Reviews
Simply Retirement is a Pension Transfer Specialist and holds the appropriate qualification and experience required to provide financial advice on Pension Transfers.
Access your Pension Fund from the age of 55, and take a 25% tax free lump sum!
Simply Retirement will:
- Obtain a ‘Letter of Authority’ to gather information only about your existing benefits.
- Complete an analysis of your existing pension scheme.
- Provide you with a ‘Summary of Facts’ to explain your benefits to you.
The above is completed ‘at our own cost’ without any obligation to you. Once we have placed you in an ‘informed position’ we believe you can decide if you want to engage our ‘advice’ service further and we can be specific about the costs.
Certain types of pension ‘transfer’ require you to be advised by a specialist adviser, such as us, before you will be allowed to transfer your benefits to an alternative pension plan. We can assist you with this. You will NOT be allowed to ‘transfer’ if you have not taken advice from a Pension Transfer Specialist.
Final Salary Scheme’s (also known as Defined Benefit schemes) can have an element of ‘security’ in terms of what they will provide for a member in the future. These can be valuable and should be properly considered and analysed.
A Final Salary Pension provides certainty over the pension income that you receive until the day you die. Normally, if you are survived by a spouse there will be a reduced pension payable to them. However, the benefits payable are prescribed and fixed. You have no flexibility or control over how the benefits are taken, or what happens in the event of your death.
Also, Money Purchase pension arrangements can have benefits that will need careful consideration before transferring to ensure that you are not giving up a higher tax free cash sum entitlement or losing guaranteed annuity rates.
Why Transfer a DB Pension? (An Alternative – Flexi-Access Drawdown)
In April 2015 Legislation was introduced to provide greater flexibility over how pension benefits are taken and you can pass on any unspent pension to your loved ones when you die.
Flexi-Access Drawdown provides the following features:
- Allows you to access your benefits from age 55
- You can take 25% of your fund as a tax free payment.
- The remaining 75% of your fund can be invested, and used to provide income.
- You do not have to take any additional ‘taxable’ income.
- You can take income from your fund, until it is depleted.
- In the event of your death before 75, your beneficiaries (anyone you choose) can:
- use the fund left and buy an annuity, tax free
- use the fund and draw income from it, tax free
- be paid the fund as a lump sum, tax free
On your death after the age of 75, your beneficiaries will be taxed when they take the benefits based on their tax situation when they make withdrawals.
Why might a transfer be suitable?
Our default position when considering a final salary scheme is ‘not to transfer’. From this ‘stepping off’ point we can then evaluate what benefits would be given up if a transfer takes place and how a transfer might be suitable to meet specific needs or circumstances.
Sometimes a transfer may be suitable to allow:
- Access to benefits from age 55
- Payment of a higher tax free cash lump sum
- Providing a Lump Sum without having to take the pension income until later
- Providing greater death benefits for the people you choose
If you transfer your pension you won’t be able to transfer back, so tread carefully and do your sums before making a decision.
Final Salary Scheme – This is a ‘promise’ of a pension in the future from an employer. You will typically receive an annual pension (or a lump sum and reduced pension) at your Normal Retirement Date which is based on your years of service and your salary. You do not carry any of the investment risk and it is the employer’s responsibility to ensure that there is sufficient money to meet the promises that have been made. However, they may provide a Cash Equivalent Transfer Value as an alternative to release them from their liability. This is the amount you would transfer.
Money Purchase Arrangement – This is a pot of money that is ring-fenced to provide you with a benefit at retirement. The fund is invested and can go up and down. It is the value of the fund at retirement that will provide for your benefits. There are several options for withdrawing this money when you reach retirement which can include a Pension Commencement Lump Sum (Tax Free Cash), Flexi-Access Drawdown, Annuities, Uncrystallised Pension Fund Lump Sum (UPFLS).