Final Salary Pension Schemes
This will effect you if you have a deferred Final Salary Pension plan or Defined Benefit Pension.
If you are a deferred member, i.e., you have left your employer but the pension is not due for payment until your normal retirement date (65?), your right to a Cash Equivalent Transfer Value (CETV) may be affected.
In the recent Budget Announcement 2014, there was a ban on transferring Unfunded Public Sector Pension Schemes. This is basically government workers. The reason behind this was to stop these workers with government pension payable in the future, taking a transfer value so that they could benefit from the proposed Budget announcement (2014). This announcement proposed that from April 2015 you can withdraw your entire pension fund in one go. However, Government pensions are not funded and the pensioners are paid for buy collecting taxes each year. Allowing too many of these people to transfer their benefits would put great pressure on the tax system. Therefore, it has been prohibited.
However, transfers from Private Final Salary Schemes were under consultation. In August 2014 it was decided that ‘transfers’ from these schemes would continue to be permitted, but if the value of the fund is greater than £30,000 specialist transfer advice must be sought.
Ultimately, this might not be the best course of action for everyone and we would need to complete a full and detailed analysis to provide you with a personal recommendation.
If you would like to explore your position, please contact Mark Swann on 01622 664440.