Leaving a final salary pension fund is a serious matter which should not be taken lightly. It is the only type of pension scheme that offers a guaranteed pension linked to your salary. There are no other pension schemes that can offer that certainty.
If the benefits of flexible access to the cash value of your fund are attractive to you and the independence of controlling your investment decisions is important to you, transferring your pension may become a realistic option.
The facility to transfer the cash value of your fund and leave the final salary scheme is due to be withdrawn in April 2015. Given the work involved and the unprecedented number of applicants many schemes are struggling to cope with the Administration.
We recommend anyone considering alternative options to request a transfer value immediately. This does not commit you to anything. What it will do is provide you with the figures to compare all your options and to begin to plan your future based on the cash available.
The transfer value is calculated by assessing the amount of cash required by the fund manager to provide the benefits you have accrued to date. It doesn’t take into account your future earnings as if you leave the scheme you are no longer eligible to contribute.
Once you receive your transfer value you can evaluate the benefits of both options and start to make your decision.
You are advised to consider consulting a financial advisor if you have any reservations whatsoever. You may also wish to consider the investment strategy going forward for your fund. The tax implications of withdrawing cash from your fund need consideration and you may wish to take advice on planning how to minimise your tax liability.