PROS AND CONS OF CASHING IN A DEFINED BENEFIT PENSION

PROS

YOU may have health conditions which limit life expectancy. Transferring means you are giving up a guaranteed income for life, but you have complete control of your pension to use as you wish.

YOU may be single, so the automatic spouse income from the defined benefit pension simply isn’t relevant to you.

YOU can control when you access your money, including the income, any lump sum, and control how much tax you pay on income and tax on death.

TRANSFER values have been higher than usual due to economic conditions.

CONS

YOU are giving up a guaranteed income for life which will usually increase each year in line with the cost of living.

YOU must seek proper regulated financial advice which can be dear (this applies to any transfer where your pension is valued at over £30,000).

YOU leave yourself vulnerable to fraudsters who might encourage you to invest in unregulated investments.

THE financial regulator and an influential working party of MPs are concerned about poor practice in the market and cases of inappropriate or poor advice. So always take your time and choose your adviser with care.

ANDREW Tully says: “There are situations where transferring a final-salary pension can make sense, but it is one of the single biggest financial decisions you can take in your lifetime. And there is no going back if you transfer and subsequently change your mind. So take your time, speak to your family, and find a good regulated financial adviser.”