If you haven’t obtained a final salary transfer figure within the last six months, given the fact that final salary transfer values are currently so high, it may be wise to ask for one, before it’s too late.
The Value Of Final Salaryhas increased, dramatically
Pension freedom rules which came into force in 2015 have given even greater flexibility with what you can do with your pension. The current reality is that your could be your second most valuable asset. In some instances, your most valuable by a considerable margin – even more valuable than the family home.
Request for Cash Equivalent Transfer Value (CETV)
The Cash Equivalent Transfer Value (CETV) is the cash sum that trustees of your pension are willing to transfer to a personal arrangement in exchange for you giving up your pension right with them. In simple terms, the money they will give you, in cash, to be released from their obligation of paying your pension until you die.
A simple request to your pension provider will reveal how much is due to you. In some cases recently, the figure is eye-wateringly high. Last year, the Daily Telegraph reported on a pensioner who had been offered £1.3m to transfer out of his scheme and give up a £40,000 annual pension. The sum equated to 32.5 times his annual pension, a historical high, and he has since gone ahead with the transfer.
The trend is currently continuing, and if anything, increasing. In our recent Case Study, we reported on a client who had experienced a 570% increase in 11 years – giving him a transfer figure way in excess of anything he expected.
Should You Consider A Final Salary Transfer?
Generally speaking, the bigger your employer, the more your transfer value is likely to be. Large companies, like Barclays, HBOS etc. are offering the best transfer values. But it is worthwhile checking what your CETV will be.
For those who are receiving the best options, there are many good reasons why it will make sense to transfer. The DWP has ensured that you are protected by stipulating that pension providers must not accept a transfer from a final salary scheme where the member has not received advice from a suitably qualified Pension Transfer Specialist, such as one of our advisors at Haven.
We would always recommend that you seek independent advice before you take any action with your final salary pension scheme, as any action taken is usually irrevocable and there are valuable benefits that might be lost on transfer, depending on your personal situation.
What to do with YOUR Final Salary Pension Pension
If you haven’t obtained a final salary transfer figure within the last six months, we suggest that you contact us to do so. With final salary transfer values being at an all time high, it would be prudent to find out how much you could transfer, should you wish to do so.
There is no requirement to do anything once you receive your final salary transfer figure. And, usually, your trustees will provide one CETV per year at no cost to you. But once you have a figure, we can help you decide on the best course of action to make the most of your most valuable asset.
Our advice is not to leave it too long. If interest rates rise, a final salary transfer value is likely to be cut dramatically, meaning that you might, potentially, miss out on tens of thousands of pounds.