A closer look at Defined Benefit Pension schemes.
By transferring your Defined Benefit Pension scheme rights to a personal pension, you may have more flexibility in retirement and upon death.
There will be valuable guarantees included within your occupational pension, and we will be able to assess whether or not it is beneficial for you to transfer and give these up. With historically high transfer values (the Bank of England’s base rate rise could impact transfer values, since an increase in rates is likely to see gilt yields rising), now is a good time to at least consider your options as part of reviewing your retirement plan.
In order to assess whether a transfer is the right option for you, we would first complete an income versus expenditure exercise. This looks at you drawing pension benefits from your expected retirement age – compared to you retaining your Defined Benefit Scheme pension rights – to what your retirement might look like upon transfer.
We suggest looking to work towards your maximum income requirement, with a low net annual investment return assumed, as investment returns are by no means guaranteed. We also factor in charges and inflation. Our analysis will take into account all assets disclosed, and the possible impact of any Lifetime Allowance charge, in assessing how your income needs can be best met to age 100 (and beyond).
Whether a transfer is suitable is specific to each individual and is not for everyone.
Investment returns are required, and it is important to understand that consistent growth is not guaranteed and unlikely. There is also a risk that actual growth is less than inflation, which means your pension fund could run out during your lifetime. People need to be willing and able to take the financial risk of these eventualities occurring if a transfer is to be considered at all.
It is important to assess the pension rights held as part of a full retirement income plan.