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Should I cash my Final Salary Pension

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.

Find out if the Final Salary Pension transfer offered is a good value.

Final Salary Pension cash out articles:

Unbiased – Leave or remain in final salary pension
The Telegraph – Why now is the time to cash in your final salary pension
Money.co.uk – What if I have final salary pension

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.


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