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Is your pension fit for purpose?

4th October 2017

Is your pension fit for purpose?

If you've accumulated numerous workplace pensions over the years from different employers, it can be difficult to keep track of how they are performing. There is a danger that long-forgotten plans will end up festering in expensive, or poorly performing funds, and the paperwork alone can be enough to put you off becoming more proactive, also, older or more simplistic plans may not allow you to benefit from the new pension freedoms introduced in 2015, which gave retirees total flexibility on how they accessed their retirement income.

Should I consolidate?

Pension consolidation involves bringing all of your separate pension plans together and combining them into one single pension plan whereby a strategy can be implemented and managed to ensure that risk and performance are being met in accordance with your longer term objectives. Making the most of your pensions now could have a significant impact on your retirement; getting it right could mean a higher income, or even an earlier retirement date, or greater flexibility in terms of taking a retirement income.

Defined Benefit/ Final Salary

If you have a Defined Benefit (DB i.e. Final Salary) pension from a prior employer, and are not yet drawing the pension, we strongly recommend that a cash equivalent transfer value (CETV) is obtained, and that we undertake a no obligation review of your options.

We understand that historically final salary pensions were considered sacrosanct and in the majority of cases, should not be touched. That said, several factors have transpired to drastically increase the attractiveness of Final Salary transfers. Historically low gilt yields have mathematically forced scheme actuaries to increase transfer values significantly. The imminent rise in gilt yields will reverse this calculation and lower transfer values once again.

  • Changes in legislation have made the death benefits and IHT-efficiency of Defined Contribution (DC) pensions, like SIPPs, much more attractive than DB pensions or annuities.
  • The total value of a SIPP can be passed tax-free to a beneficiary upon death before age 75.
  • For those with significant assets, a SIPP can remain invested until death and the assets can miss out the spouse and be passed down to the next generation IHT-free.
  • Defined benefits are inflexible in terms of accessing them and a transfer to a defined contribution pension can provide greater flexibilities and control. 

There is a window of opportunity that is about to close, and we urge clients that may have dismissed this in the past, to reassess in light of the above.

If you would like a free initial consultation to discuss your options then please contact Wise Financial Solutions on 01252 413231 or email info@wisefinancialsolutions.co.uk

 

CLIENTS WORDS

Always give great service and very helpful. Would happily recommend Wise & Co.
Security industry client

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