Pension Transfer Adviser in Cambridge
If you’re thinking about transferring or accessing your pension, and the value of your pension pot is £30,000 or more, you should get professional advice.
Pension Transfer Advice Cambridge
Pensions fall into two main types – defined contribution (also known as ‘money purchase’ or ‘DC’) pension schemes and defined benefits (also known as ‘final salary’ or ‘DB’) pension schemes.
Pension transfers (sometimes called pension switching) benefits from one DC to another DC pension is reasonably straightforward because you are moving one pot of money from one pension provider to another pension provider offering the same type of scheme. However, there are three main things you must consider:
Also, don’t be tempted to base your decision to transfer solely on “past performance”. The performance of a fund is not guaranteed. Chasing past performance of a fund that may not be suitable, could have higher charges or is higher risk, and/or involves giving up guarantees, could be a costly mistake.
Transferring benefits from a DB pension scheme to a DC pension is a completely different exercise. By definition, you would be giving up certain guaranteed benefits in favour of benefits that are not guaranteed. The benefits will rely on future investment returns, interest rates and inflation. Alongside this, the value of your pension will be reduced by charges.
Therefore, you should be very cautious about transferring benefits from a DB pension scheme and we recommend that you avoid firms who are actively promoting the idea of doing this. However, there may be specific reasons or circumstances that mean a DB transfer would make sense. For example, your health and the death benefits, whether you have any dependants, when you want to retire, how much the lump sum benefit might be and what other income or assets you have available for your retirement. Therefore, you need to fully understand the options and the risks, as well as the potential benefits.
If you are considering a DB transfer it is imperative that you get professional advice from someone who is appropriately qualified and registered with the Financial Conduct Authority (FCA) as a ‘pension transfer specialist’. This is potentially a high-risk area of advice and has cost for a firm that is prepared to provide this advice. Therefore, any advice and recommendations will have commensurate costs attached.