Sarah Hogan is a Pension Transfer Specialist on behalf of Openwork and has been awarded the Gold Standard for defined benefit pension advice.

Defined benefit pension transfers have been popular in the market and the press in recent years due to the availability of Flexi Access Drawdown following a pension transfer from a defined benefit scheme. However, giving up a guaranteed, inflation proofed income in retirement for a lump sum that is not guaranteed is not right for everyone.

The FCA believes that a defined benefit scheme is, in some cases, a person’s most valuable asset and the majority of them should remain in the scheme however there may be circumstances where a transfer is viable.

The first question to ask yourself is how reliant are you upon that guaranteed income in retirement?

Working with retired clients on a regular basis, the one thing you cannot put a price on is peace of mind. It’s a very strong position to be in to know that your outgoings are paid for from guaranteed income sources before you get out of bed in a morning. If you are looking to give that up for a higher risk, non-guaranteed environment there has to be a good reason.

Understandably, if you are single and don’t want the scheme to die with you then this is something to consider. Creating a legacy for your children is an important factor but not at the expense of your own retirement income. Consider that if you transfer the scheme to leave a legacy for your children however the fund is then exhausted through withdrawals or poor returns on the funds, there would be nothing to leave to the children anyway.

We ask all of our clients to watch the Money Alive videos (add link) to ensure they understand the implications of what the undertaking before we even start the process.

The situation differs slightly if you are terminally ill. If there is a situation where a client is terminally ill, the reasons for transferring the scheme will be different as they will not see the benefit from the retirement income. However, you do need to be careful not to fall foul of HMRC’s stance on transferring pensions, death within two years and inheritance tax. Please get in touch for more information.

If this is something you wish to consider then please get in touch on 01942 889883 or send Sarah an email on sarah.hogan1@openwork.uk.com.