Final Salary Pensions

What is a Final Salary Pension?

A final salary pension, or defined benefit pension scheme, is a type of workplace pension that will pay you a retirement income for life. The amount you will receive in retirement is calculated using your salary when you retire or your average salary.

Often referred to as a gold-plated pension, the financial services regulator, the Financial Conduct Authority (FCA), has stated that it will be in the interests of most people to keep their defined benefits pensions because of the valuable guarantees these provide

Pension Freedoms

Following changes in legislation, known as Pension Freedoms, there is now more flexibility in the way you can access your pension funds, although this will not necessarily be through your existing scheme, and excludes final salary pension schemes. Not only did the government specifically exclude defined benefit pensions schemes from Pension Freedoms, they made it a legal requirement for members to get advice on transferring, if the transfer value of their benefits in the scheme are greater than £30,000.

Transfer Advice

However, if you have had a defined benefit/final salary pension scheme in the past but you are no longer an active member (either because you’ve left the company or the employer has closed the scheme), you may still be able to benefit from the freedoms, or use some or all of the money to secure an alternative guaranteed income via an annuity, by transferring your pension.

Transferring out of a defined benefit pension scheme is a big decision and isn’t right for everyone. At Wotton Wealth Management we are high experienced in providing the most suitable advice to our clients in this complex area of financial planning.

Christopher Wotton is a Pension Transfer Specialist and is authorised to provide advice on all pension types including Personal Pensions, Retirement Annuity Contracts, Section 32 pensions, company pensions including Defined Benefit/Final Salary plans and pensions with safeguarded benefits.

This article is for information only and is not intended to be, and should not be interpreted to be, personalised advice.