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the family if I were to die with this type of pension.
“If I were to stay in the final salary scheme it would pay half the income to my wife, Lucy, but on her death nothing goes to the children.”
Since 2015, “defined contribution” pensions, the type that Mr Handley now has, have benefited from extremely generous tax rules on death.
Unspent pensions are no longer subject to a 55pc “death tax” but can be passed down the generations indefinitely, attracting duty only at the income tax rate of the recipient.
This perk is one of the reasons for transfers’ increasing popularity. High cash offers, resulting from ultra-low interest rates, and the ability to stop and start withdrawals add to the appeal. So far Mr Handley has taken a single lump of £50,000 to pay for improvements to the family home. Strong investment returns since the transfer mean this cost has already been recouped.
He aims to grow the pension to £1m over the next decade, which he calculates will allow him to draw down an income roughly double what hat he would have received from m the Lloyds pension, even accounting ounting for inflation.
Despite their appeal, ppeal, pension transfers are not suitable for everyone. one.
Mr Handley has s a background in financial services and income from his business that will continue when he retires, as well as entitlement to a state pension. Research last year from the City regulator regula into cases where advisers r recommended a transfer found it was the wrong advice more than half of the tim time. Pension and investment firm Aegon ha has produced a “triage” s system to help save savers determine whether it is worth paying f for financial advice on a transfer. Questions Questi include whether wheth or not the in individual has a partner, any life-shortening conditions and other sources of guaranteed income.
Steven Cameron of Aegon said: “We’d like advisers to be able to offer some pointers or rules of thumb to their clients to help them decide if it’s worth spending money seeking advice on whether to transfer. This could save customers time and money and allow advisers to focus on those customers for whom it’s truly worth considering a transfer.”
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Ian Handley: ‘ transfer should double income’