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Consulting on Pension Transfers

When might it be advisable to restructure your pension arrangements and when should you leave well alone? These are questions which have increasingly come to the fore since pension freedoms were introduced two years ago. Whilst undoubtedly the new flexibility has benefited some, concerns have been raised about whether others are either being misled by potential scammers or are looking at short term gains at the expense of long term stability.

One area of particular concern is that of defined benefit, or final salary, pension schemes. With this in mind the Financial Conduct Authority (FCA) has issued a consultation which looks to strengthen the advice given to individuals who are considering transferring their pensions away from a defined benefit scheme. This includes replacing the current transfer value analysis with an analysis of the client’s options including taking into account the value of any benefits given up.

Offering a guaranteed benefit for life as well as payments to a surviving widow or widower, the historic view has been that transferring funds out of a defined benefit scheme is (in the words of the FCA) unlikely to be in an individual’s best interests. However, pension freedoms combined with the high levels of transfer value offered by some companies has opened up the debate. The proposals contained in the FCA consultation are designed to help consumers to make “well informed decisions which consider all relevant factors.”

If you’re looking for pensions or investment advice, or if your situation has changed and you may therefore need to review your existing investments, contact Beckworth by using one of the links on our website.