My wife has a final salary pension. The conditions on offer started getting worse around the financial crisis. Her salary level to work as a basis for final salasry calculation was capped and now stands for about half of her current salary. I started investigating if it’s worth for her to opt out of final salary pension and transfer to personal SIPP.
She received a valuation which seems to be around 21 times her guaranteed income. Still not sure what to do, I will definitely speak to professional financial adviser and update this article.
But as you found this article and would like to find out a little bit more here are the “final salary transfer calculator” and a few good articles I found on the subject:
Final Salary Transfer Calculatror.
Final Salary Pension cash out articles:
The pros and cons of transferring your final salary pension
Pros of opting out:
- you can have greater control of your pension fund
- if you have no spouse, you may have no need for some of the benefits
- you can pass on money to your heirs via a transfer
- you might have more than one final salary scheme and only want to transfer one fund
- you can get your hands on a large lump sum
Cons of opting out:
- you’d be giving up a guaranteed, predetermined income for the rest of your life
- with a final salary scheme, you don’t have to use investments to generate retirement income
- final salary pensions are index-linked, meaning they rise with inflation
- final salary schemes usually provide better retirement income than you could secure by other means
- it’s tough to know whether the ‘cash equivalent transfer value’ (CETV) you get represents a good deal or not (please see a pension calculator above for estimation)
Pros and Cons source: Money.co.uk
Please note this article is not a financial advise. Pension decision is one of the most important in your life and you should seek professional advise on this subject.