soupdragon
Distinguished Member
The missus and I both have deferred (ie, dormant/closed) final salary pensions and are now paying into defined contribution pensions at the moment.
I came across an article on BBC news about final salary/defined benefit pensions and lots of people 'cashing them in' for a more standard pension. This gives you more flexibility to manage your pension pot your own way, rather than receiving a simple payment from the pot every year until you die.
Due to the formula's used to calculate the cost of pensions, its possible your annual final salary amount could be worth around x30 in transfer value. These values are based on current market conditions and will move around all the time, but as an example, for every £1k per annum final salary pension you have, it could be worth around £19-£27k in transfer value based on a 65 retirement age (or, if your lucky enough to have a 60 years retirement age agreement, could be close to £33k for every £1k)
When I look at both me and the missus pension combined from our closed schemes, its a fairly significant amount of money that we are just letting sit there until we retire, rather than receiving proper financial advice.
The reason for this thread is two-fold. One is to let other members know that right now, the multiplier is significantly in our favour due to current market conditions right now and if you have one of these pensions, you really should be looking at what it could mean to you.
Secondly, is for me to ask more experience members if they have come across this option, and have they acted on it? Did you receive financial advice? And did you move it to a more standard pension?
I'm only 40 at the minute so retirement is a long way away, but its my legal right to ask the trustee's to give me a quote to transfer the money to a different pension.
To summarise some pro's for doing nothing and switching
Pro's for doing nothing is basically you've a guaranteed income until you die - can't get anything more secure than that! You also may have kids/partner benefits as part of the overall pension package
Pro's for switching
Miles more flexibility to manage your pension pot. For example, I can cash in my 25% tax free long before I actually retire.
I can then choose to do whatever with the rest. Investments with drawdown to suit your time in your life, rather than a set annual rate. You can be more tax efficient with how you release your money.
And probably a big one for me, anything you don't use from your pension pot gets handed over to your children, rather than being buried with you.
Overall, I'm seriously considering switching the value into a standard style pension and opening up much more flexibility in the future of our family and also what we hand down to our kids. Anyone else with this type of pension done the same?
I came across an article on BBC news about final salary/defined benefit pensions and lots of people 'cashing them in' for a more standard pension. This gives you more flexibility to manage your pension pot your own way, rather than receiving a simple payment from the pot every year until you die.
Due to the formula's used to calculate the cost of pensions, its possible your annual final salary amount could be worth around x30 in transfer value. These values are based on current market conditions and will move around all the time, but as an example, for every £1k per annum final salary pension you have, it could be worth around £19-£27k in transfer value based on a 65 retirement age (or, if your lucky enough to have a 60 years retirement age agreement, could be close to £33k for every £1k)
When I look at both me and the missus pension combined from our closed schemes, its a fairly significant amount of money that we are just letting sit there until we retire, rather than receiving proper financial advice.
The reason for this thread is two-fold. One is to let other members know that right now, the multiplier is significantly in our favour due to current market conditions right now and if you have one of these pensions, you really should be looking at what it could mean to you.
Secondly, is for me to ask more experience members if they have come across this option, and have they acted on it? Did you receive financial advice? And did you move it to a more standard pension?
I'm only 40 at the minute so retirement is a long way away, but its my legal right to ask the trustee's to give me a quote to transfer the money to a different pension.
To summarise some pro's for doing nothing and switching
Pro's for doing nothing is basically you've a guaranteed income until you die - can't get anything more secure than that! You also may have kids/partner benefits as part of the overall pension package
Pro's for switching
Miles more flexibility to manage your pension pot. For example, I can cash in my 25% tax free long before I actually retire.
I can then choose to do whatever with the rest. Investments with drawdown to suit your time in your life, rather than a set annual rate. You can be more tax efficient with how you release your money.
And probably a big one for me, anything you don't use from your pension pot gets handed over to your children, rather than being buried with you.
Overall, I'm seriously considering switching the value into a standard style pension and opening up much more flexibility in the future of our family and also what we hand down to our kids. Anyone else with this type of pension done the same?