You need to seek the advice of a professional pension specialist in order to consider transferring a defined benefit pension scheme to a defined contribution pension scheme. Therefore whatever end of the spectrum you are, this offers up an opportunity to review your full financial plan with the help and support of a professional adviser.
When considering the suitability of transferring a defined benefit pension scheme our advisers take a holistic view, taking into account all of your assets, liabilities, income and expenditure. Our adviser will be critical and will challenge your thoughts and views on transferring such benefits.
We are advisers not order takers, it would not serve purpose if we allowed clients to make poor, impulsive decisions without warning and challenge.
We will listen to your needs and look at your long term goals and then stress test possible outcomes to ensure you have the good and bad outcomes to help make your decision.
We will also constantly review the plan following transfer to ensure it remains on track to meet your objectives in the future. Mistakes made early on can have devastating consequences on the longevity of your plan and its ability to provide sustainable income for the expected term.
A full advice process obviously comes at a cost. It involves hours of work discussing your needs, collecting data and reviewing your plans going forward. Compared to the cost of a poor outcome however fees can be insignificant.
Critical dependence
At one end of the spectrum are those that are critically dependent on their DB scheme with little or no other sources of income to rely on. In most cases it would not be appropriate to transfer benefits and our advisers will usually indicate this at an initial stage. Unfortunately this means they may be driven down the road of poor advice elsewhere and order taking as they insist on a transfer but wish to keep costs down which may not always be in their best interests.
Strategic Pension Transfer
At the other end of spectrum there are those who have significant other assets and don’t wish to use their pension for income but wish to transfer it for other tax advantages. In this situation a transfer is more likely and they can also afford to pay fees in advance of any transfer and therefore receive full and appropriate advice. These people have perhaps also sought advice in the past and are familiar with using a financial adviser if not actively engaged with one at the time. Their affairs are more complex and full financial planning is a must but often more importantly for their other assets than the pension in isolation.
Somewhere in the middle
For people in the middle whether to transfer or not is less clear. This is where it is most important to seek full and challenging advice from a professional transfer specialist. A lot of hard work lies ahead for the adviser in determining whether a transfer is appropriate for the client. If you find yourself in this space and have the means to pay for advice it is important to find an adviser who does not just process orders. Instead find a pension specialist that takes into consideration the points above, takes time finding out your current assets and liabilities, future goals and likely expenditure, stress tests outcomes and wants to review your plan at least annually to ensure you remain on track. We will tell you if it is appropriate or not for you to transfer benefits and would hope that by demonstrating possible outcomes you will agree with our advice.
If you require more information in how to review your defined benefit pension scheme, time frames, what paper work is required and the options available to you in retirement please contact us now to arrange an initial meeting with one of our pension specialists in Harpenden or Hitchin.
