Don’t waste thou­sands in fees – do our pen­sion trans­fer test first

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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.”

To do the test your­self visit tele­graph.co.uk/go/ pen­sion­trans­fer­test

Ian Han­d­ley: ‘ trans­fer should dou­ble in­come’

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