Monday, 20 March 2017
What did the client want?
He asked us to transfer his two defined benefit pensions into a SIPP. He had been to other IFAs but found their fees too high. His reasons to transfer were as follows:
What did we do, and what was our advice?
We ran his pension transfer packs through our Transfer Value Analysis system, and asked further questions about his circumstances. We strongly recommended that he did not transfer his pension, for the following reasons:
What did we charge for this
We made no charge - our initial assesment of a final salary pension transfer is always free.
It can make sense to transfer out of a final salary pension and we arrange such transfers 2 or 3 times per month. However, perhaps surprisingly, in situations where the pension scheme member has a much younger spouse this makes a final salary pension much more valuable, and the transfer a much less attractive idea.
Sadly, pension scheme administrators don't take your spouse's age into account when calculating a transfer value. So if you have a much younger spouse they may not offer you nearly enough. Conversly, where you have a much older spouse their transfer offer may be really generous.
There are no hard and fast rules for when a defined benefit transfer makes sense - each situation is different - so if you are considering it then get in touch and we will carry out a free assesment of your situation.