Transferring out of a final salary pension scheme has allowed many of our clients to start fulfilling their dreams and ambitions immediately, without delay. Transferring means they can start taking an income or lump sum from age 55, and don’t have to wait until their scheme retirement age, which is usually 65. It could do the same for you.
The opportunities are endless. You may want to take early retirement; go part-time; start a new business or career; write a novel; do up your house; pay off your mortgage; help your children onto the housing ladder; buy a vintage car; or travel the world.
Transferring out of final salary schemes has become attractive for many reasons over the last two years, not least the rocketing transfer values available. The pension freedom rules that came into effect in 2015 are another major factor.
It is these rules that allowed private pension holders to start taking their pension from age 55. But pension freedom rules do not apply to final salary schemes. So if you stay in your final salary scheme, you can only access the money after you reach the scheme age, and the rules are much more rigid.
A final salary transfer gives you complete freedom and control. Under pension freedom rules, private pension holders can take as much or as little of their pension as they want from age 55. They can:
This means that if your circumstances change or you simply change your mind at any point, you can still take a different option. For example, you could take a guaranteed income by buying an annuity later. The power is in your hands.
Another big benefit of transferring is access to extra tax-free cash, which can make a huge difference in achieving your life goals. Final salary schemes allow members to take some tax-free cash based on formulas set by the scheme trustees. But these calculations rarely match the 25% lump sum of cash that is available in a private pension.
If you transfer out, you can access the full 25%, free of all tax, in one go or in stages, and or use it as tax-free income.
We have helped many of our clients use tax-free lump sums to achieve their dreams. For example, Tina’s final salary transfer enabled her to take extra cash to fund her travel plans.
Anyone planning to transfer an amount over £30,000 needs to take advice by law. If you plan to cash in all or large chunks of your private pension in one go, assessment from a specialist adviser is strongly recommended. This is because, outside the 25% tax-free element, the Revenue will treat it as income for tax purposes.
This could push you into higher tax brackets, which could be 40% or 45%. A specialist adviser can also help ensure your position remains as tax-efficient as possible; and make sure your pension income remains sustainable, which is a crucial part of your decision to transfer.
Final Salary Transferwise is an initiative of independent adviser Blackstone Moregate, which has provided specialist pension planning for 17 years. The team have a combined experience of 70 years.
If you are considering a transfer and taking some money early, we will assess the suitability of this plan with a holistic review of all your financial affairs, including goals, assets, income, background, and risk appetite.
We also have specialist tools and technical skills to help make sure your retirement income will last your entire life and never run out.
The result is a fully-informed, professional and transparent recommendation.
With our help, you can find out if a transfer is suitable for you. Start reaching for your dreams today.
Contact Vijay Thakkar at 020 3376 1444, firstname.lastname@example.org.