Mov­ing pen­sion sav­ings?

Trans­fer­ring pen­sions from one scheme to an­other can be fraught with risk. Carl Lamb looks at why it’s im­por­tant to get good ad­vice

Norfolk - - YOUR MONEY -

It is pos­si­ble to move pen­sion sav­ings from one scheme to an­other. How­ever, there are pit­falls to avoid: the pen­sion saver who doesn’t un­der­stand what a trans­fer en­tails is in dan­ger of los­ing valu­able guar­an­teed ben­e­fits (known as ‘safe­guarded’ ben­e­fits) or in­cur­ring fu­ture un­wanted re­spon­si­bil­i­ties and costs.

That’s why ad­vice is crit­i­cal for any­one con­sid­er­ing a trans­fer. In­deed, get­ting fi­nan­cial ad­vice for pen­sion trans­fers is com­pul­sory for any­one with safe­guarded ben­e­fits worth over £30,000.

In re­cent years we have seen mem­bers of Defined Ben­e­fit (DB) Pen­sion Schemes – also known as Fi­nal Salary Schemes – choose to move their DB ben­e­fits, based on length of ser­vice and salary, into a Defined Con­tri­bu­tion (DC) Scheme where growth is de­pen­dent on in­vest­ment per­for­mance. They do this in the pur­suit of bet­ter re­turns. The same prospect can mo­ti­vate them to trans­fer ben­e­fits from one DC scheme to an­other.

In a move to sign­post pen­sion savers to suit­able ad­vis­ers, the Per­sonal Fi­nance So­ci­ety – the pro­fes­sional body for fi­nan­cial ad­vis­ers – has set up a new stan­dard for firms of­fer­ing pen­sion trans­fer ad­vice to those with safe­guarded ben­e­fits: the Pen­sion Trans­fer Gold Stan­dard.

This sets out nine core prin­ci­ples for firms that de­ter­mine the struc­ture of their pro­cesses as well as the qual­ity of ad­vice and trans­parency of the in­for­ma­tion pro­vided. It’s also about mak­ing sure you un­der­stand if and why you might need ad­vice and what that ad­vice might cost.

Firms hold­ing the Gold Stan­dard will have the peo­ple with the right qual­i­fi­ca­tions and ex­pe­ri­ence to de­liver pen­sion trans­fer ad­vice that pro­tects your best in­ter­ests and who will rec­om­mend suit­able in­vest­ment so­lu­tions in which to in­vest your newly trans­ferred funds to achieve your de­sired out­comes. Smith & Pinch­ing and Al­mary Green are among the early adopters of this stan­dard.

A de­ci­sion to trans­fer safe­guarded pen­sion ben­e­fits is usu­ally an ir­rev­o­ca­ble one, with long-term con­se­quences and is of­ten not in the best in­ter­ests of the pen­sion saver. How­ever, there are cir­cum­stances when it is worth con­sid­er­ing – where you have suf­fi­cient other guar­an­teed sources of re­tire­ment in­come, for ex­am­ple, or where your fo­cus is on pro­vid­ing ben­e­fits for ben­e­fi­cia­ries on your death. Do make sure that you take ad­vice from an in­de­pen­dent fi­nan­cial ad­viser hold­ing the new Pen­sion Trans­fer Gold Stan­dard if you are con­sid­er­ing do­ing it.

Any opin­ions ex­pressed in this ar­ti­cle are sub­ject to change and not ad­vice. Any so­lu­tion de­scribed may not be suit­able for ev­ery­one. The value of an in­vest­ment and the in­come from it could go down as well as up. The re­turn at the end of the in­vest­ment pe­riod is not guar­an­teed and you may get back less than you orig­i­nally in­vested. The tax treat­ment of in­vest­ments de­pends on in­di­vid­ual cir­cum­stances and is sub­ject to change.

Smith & Pinch­ing and Al­mary Green are Char­tered Fi­nan­cial Plan­ners and ad­here to the Pen­sion Trans­fer Gold Stan­dard. If you would like a no-cost ex­ploratory re­view to dis­cuss your re­tire­ment plan­ning with an ad­viser from ei­ther Smith & Pinch­ing or Al­mary Green call 01603 789966 or email en­[email protected]­ing.

This content is sup­plied by Smith & Pinch­ing and Al­mary Green.

ABOVE: Your nest egg is im­por­tant and good ad­vice is es­sen­tial Photo: Getty/Brian A Jackson

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