Top 5 Reasons to Review a FS (Final Salary) Pension Scheme
Whilst Final Salary (FS Pension) or Defined Benefit Pension Schemes can have some distinct advantages to their members, they tend to be one-size-fits-all and not necessarily what’s best for YOU.
Everyone’s personal circumstances and retirement goals are different, so there may be a more appropriate pension solution out there for you, but where do you start?
The decision to transfer your final salary pension to another scheme should not be taken lightly, and professional, qualified help is on hand to make that comparison for you and present it in a way you can understand.
Here are my Top 5 Reasons to Review a Final Salary Pension:
1. Death Benefits – Once you have left an employer, the death benefits in the FS pension may be minimal. Under many other pension arrangements, the death benefits are usually the entire fund, tax free.
2. Tax Free Cash – In the FS pension this is based on a variety of scheme factors but in other pensions is usually 25% of the whole fund, which is usually larger and can be improved by good investment performance.
3. Pension income – In the FS pension benefits are fixed at the date of leaving and increased each year by inflation. In other pensions, good investment performance could improve the fund beyond inflation.
4. Choice and Control – The FS scheme decides how the scheme runs and is invested, and can impose high penalties on taking benefits early. In other pensions you can choose your own investments and investment strategy. You also have the flexibility to decide when you wish to take benefits and at what level.
5. Security – Your previous employer underwrites the FS pension, so it is only as secure as the company. If a scheme is in deficit or the company fails, the funds may pass to the Pension Protection Fund.
For a minimal fee you can find out the pros and cons of transferring your Final Salary Pension, to see how this could open up your options for retirement.