Occupational and Final Salary Advice
An occupational or final salary pension can be very valuable.
Many schemes have either closed or are in the process of closing to new entrants. If you are in an active scheme it would be very rare you would ever want to leave your scheme as the long term benefits can’t often be matched elsewhere.
Many people have deferred final salary pensions. These are frozen pensions from previous membership in a final salary or occupational pension scheme. In the past it was very rare for people to want to transfer these type of pensions into private arrangements.
Your deferred final salary pension will increase in deferment until your normal retirement date based on a number of factors. These factors include the date you left the scheme, whether guaranteed minimum pension is included in your scheme, the underlying scheme benefits, rules and revaluation factors, and trustee and actuarial decisions up until your normal retirement date.
New rules introduced in April 2015 have significantly increased the demand to access deferred final salary pensions to transfer into personal pensions, annuities or flexi access drawdown.
Our definition guides should help explain some of the features of occupational pensions, but not only is it the right thing to get advice if considering accessing your final salary scheme, it has also been made a regulatory requirement. Unless you are taking your benefits from your main scheme administrator in the form of a scheme pension, you should find it impossible to do anything without independent financial advice.
Can we help? Yes
Do we do it ourselves? Yes
This the most complex area of advice in terms of pensions. As qualified pension specialists there isn’t any area of pension advice that we can’t help with.
We have a full section covering this type of advice and typically initial costs are higher. One of our team would be able to provide a quote outlining the full cost of advice on either a fee or advisor charge based option.
The government has made it clear that these type of pensions always require advice and we will do all we can to make it as costs effective as possible.
The advice process:
- Understand your situation and your objectives (this includes assets, liabilities, family structure, intended retirement date, health, other pensions and income, work situation, and your lifestyle both now and in the future).
- Understand your pension structure including your occupational schemes and provide full transfer analysis (see our what is transfer analysis section).
Things we consider when recommending on whether to transfer or not:
- The analysis of your scheme and the overall strength of the future benefits at your normal retirement date (see an example of the report we produce).
- The CETV on offer.
- The revaluation of your pension—this is how much your pension should increase each year before retirement.
- The escalation of your pension—this is how much your pension will increase in retirement.
- Your attitude to risk.
- Guaranteed income requirement both now and in the future.
- Your health—this plays an important part in any advice. Occupational schemes become more valuable the longer you and your spouse live. Reduced life expectancy for you and your spouse are important factors in the decision to transfer.
- The date you want to commence your retirement.
- Your attitude to income and tax free lump sums.
- Pension and other assets.
- Your current and future income.
- Any significant debts or liabilities.
- Inheritance tax position and attitude to taking your pension and passing it on to future generations.
- Financial position of your scheme.
- Your Lifetime Allowance position
- Does your scheme offer a part or partial transfer (becoming more common in achieving a guarantee income and some flexibility)?
The next step: we consider all these factors along with the analysis of the scheme(s) and ascertain whether the scheme meets you and your family's immediate and long term objectives. Your current position and likely future financial position, current pension legislation, retirement products, market conditions, health, risk profile are some of the factors that play a significant impact on the advice and outcome.
Feel free to get in touch today to discuss an occupational review.