The rules are explicit, people currently eligible for a Final Salary scheme will not be allowed to take advantage of the new regulation which will come into force in April 2015.
There are a number of potential theories why the government has chosen to single out this section of the working public some more cynical than others.
The conventional viewpoint has always been that a final salary scheme offers the best possible retirement solution for employees who have chosen to sacrifice a significant percentage of their income in return for a blue chip guaranteed income in retirement. In fairness historically many pension professionals have supported this contention.
Unfortunately this is no longer such a cut and dry formality.
The recent proposed changes have created an element of suspicion amongst many people affected by the proposals that this may no longer be the case. Their worry is that if the rules governing the benefits and contributions can be changed at any time in the future the “Blue Chip Guarantee” is worthless .
Another element of deep concern to both the government and employees alike is the fact that progressive cuts in staffing levels means there are fewer and fewer people paying into the scheme.
Unlike defined contribution schemes where each employee has his or her individual ringfenced “pot” final salary schemes depend on payments coming in from people still working to pay the pensions for those retired.
If the government allowed everyone to transfer out there is an obvious risk that the remaining people contributing will not be able to meet the obligations of the fund in the future.
Taking all this into consideration it is not surprising the Final Salary providers are being inundated with people clamouring to leave the fund.
How Can I find out more about my Options?
Possibly because of the uproar which would have inevitably followed if there was no transitional period whereby employees could exercise their legal right to transfer into a fund which will allow the flexibility afforded by the new regulations. The government has granted a concession that any employees wishing to leave the Final Salary scheme as long as they do so by April 6th 2015.
Macintosh Heywood can help you explore the benefits and pitfalls of leaving your final salary scheme and assist in the transfer if that is the conclusion you come to after considering all the options available.
This could be one of the most financially significant decision you will make in your entire life potentially involving hundreds of thousands of pounds and should not be taken lightly. Our advice is to seek the advice of a suitably qualified financial advisor. Not all Advisors have the qualification to advise on Final salary Transfers.