Re: Leaving a company pension scheme

Quote
lucky
I'm a financial adviser and it's important you take advice in this area. There are a number of pros and cons on both sides and you need to consider what's important to you. I saw a client earlier who is 55 and his final salary scheme offered him a pension of £7500 per annum now plus a tax free lump sum of £46000. If he transferred out he would get a transfer value of £320000 which would equate to a lump free lump sum of £80000 plus £240000 left in the pension fund to purchase some form of income if needed. Factors such as health, dependants and what other income you have need to be considered. Also what financial position is the company pension scheme in

Agreed, but don't forget that in the final salary scheme, income is also likely to be indexed annually by RPI up to 5%. That can be another significant benefit an individual is giving up if moving away. Funds in drawdown are subject to the performance of the funds invested and any income drawn will be directly off the capital value. Each case is different and needs to be approached from a unique standpoint. The general rule of thumb, which is NOT to pull out of a defined benefits scheme, still holds good in most cases - there must be exceptionally compelling evidence it is in an individual's absolute best interests, before any adviser should recommend a transfer out.

The client must also fully understand the risks involved and accept that a reasonable level of investment risk must be taken if there's any hope drawdown will work as intended.

Decent advisers (thankfully the majority these days) have to undertake a huge amount of work to reach a conclusion as to whether a transfer is viable and it is hugely complex. It's therefore a reality that most advisers will charge for production of their opinion through a suitability report, even if that advice is ultimately to stay put. Very few will look to do a shedload of work for nothing, on the basis that they will get paid if the transfer goes ahead. Those that do, *might* (consciously or subconsciously) be wanting to ensure the transfer proceeds - otherwise, no fee/adviser charge.

My opinion, nothing more. (tu)