Chapter 6 Your Final Salary Advice Checklist2018-07-25T14:02:42+00:00

Chapter 6: Your Final Salary Advice Checklist

Get Informed

If you are considering transferring your Final Salary Pension and it’s worth more than £30,000, you will need to assess your financial situation with a Qualified Pension Transfer Specialist.

Your suitability to transfer your pension will be based on your own set of personal circumstances and your financial objectives for retirement. If you are married or in a civil partnership, it is essential to involve your spouse in the advice process as your decisions will also affect their financial future. We’ve put together a Final Salary Advice Checklist to give you an idea of what should be covered when you seek advice on transferring your final salary pension.

When talking to your Financial Advisor/ Pension Scheme Administrator:

  • Ask for a full explanation of the pension and cash sum benefits you will leave behind if you leave your final salary pension, including your options for early and late retirement.
  • You should receive a full explanation of the options open to you (along with the governing rules and tax treatment) for the personal pension fund that may be created for you after the transfer.
  • Ask for a full explanation of the key risks associated with transferring into a personal pension fund, as well as the risk of remaining in your current scheme.
  • Request a personalised critical investment return assessment. This will look at what investment return is required by your new personal pension fund to match the final salary pension you would leave behind.
  • If you have a larger transfer value, or if you have opted for protection against the Lifetime Allowance, ask for an explanation as to how the Lifetime Allowance impacts your pension fund. Ask about any changes to your protection that might be caused by the pension transfer.
  • If you are married or living with your partner, it is important to involve them in the process from an early point as this decision is likely to affect the financial future of you both.
  • Given your unique set of personal circumstances, and considering your future financial objectives, ask the adviser if, in their opinion, a final salary pension transfer is a sensible transaction for you. In order for your advisor to respond they will need to:
    • Understand your (and your family’s) financial position.
    • Make sure that you (and your spouse if applicable) have the financial resources to tolerate the risks implicit in transferring out of a final salary pension to a personal pension
    • Make sure you (and your spouse if applicable) are comfortable with those risks.

In the next chapter we set out the Final Salary Transfer process that we use with all 2020 Financial Ltd customers. For a list of questions that you will be asked, please refer to our Final Salary checklist

TALK TO A QUALIFIED PENSION SPECIALIST

Sometimes it’s just nice to talk to a human. Especially when that person is a Qualified Pension Transfer Specialist with experience of Final Salary Pension Transfers. We offer a free, no obligation, 20-minute call with one of our specialists. Pick our brains, get your questions answered and find out how to get started or arrange an introductory meeting to get the ball rolling. Call us on 02380 981161 or contact us below.

Contact us

Frequently Asked Questions

Got a Question? Speak to a specialist
How to choose a Financial Adviser for a Pension Transfer2018-01-17T15:04:40+00:00
FAQ Financial Adviser

If you are considering a Final Salary Pension Transfer chances are that you will need to choose a Financial Adviser to help you. It is a regulatory requirement for Pension Transfers over £30,000 that you receive advice from a Qualified Pension Transfer Specialist.

It is important to understand that this is not just a box-ticking exercise, your Financial Adviser will need to carry out in-depth analysis on your financial situation and will have to provide a personal recommendation in order for you to transfer your pension. If they believe that it is not in your best interests to do so, you will not be able to transfer out of your scheme. They will provide you with the reasons why. This process is designed to protect you and your money.

If you proceed with a Final Salary Pension Transfer you will be taking over the responsibility for how your pension pot is invested so it’s likely that you’ll be working with your financial adviser for a long time, it’s important to choose someone qualified, experienced, trustworthy and someone that you are happy to work with on an on-going basis.

How to choose a Financial Adviser – Important things to check

  • Are they authorised by the FCA?
  • Are they a pension specialist?
  • Do they have experience of Final Salary Pension Transfer?
  • Can they provide references?
  • What are their charges initial and ongoing?

Are they authorised by the FCA?

Make sure that the person you are dealing with is authorised by the Financial Conduct Authority (FCA) and qualified to advise on Pension Transfers. This is a highly specialised field that requires professional qualifications. You can check whether your Financial Adviser is authorised to carry out this work on the Financial Conduct Authority (FCA) register.

What to look for on the FCA register?

Firstly that the company’s status is Authorised.

Secondly, under permissions you should see a box that says ‘Advising on Pension Transfers and Pension Opt-Outs’ If the firm you are dealing with is not authorised to give advice, you should find a local Pension Specialist who is. If in doubt, you can contact the FCA.

Here is our FCA register entry https://register.fca.org.uk/ShPo_FirmDetailsPage?id=001b000000NMODtAAP

Do they have experience of Final Salary Pension Transfer?

Check that your Financial Adviser has relevant experience with Final Salary Pension Transfer. You can ask for references from existing Pension Transfer clients.

Ask them for details of their process. Who will be your contact? How will they keep you updated etc? It’s best to understand this now.

How much does your Financial Adviser charge?

Be sure you know how much your transfer is going to cost – now and in the future. Financial Advisor fees vary massively. Ask what fees will be incurred for

  • The initial research and report
  • Carrying out the transfer
  • Costs for investing your money in a personal pension
  • On-going management fees etc

It makes sense to shop around for the best deal, especially when it comes to on-going fees as these can make a big difference over time. Don’t be afraid to negotiate – it always helps if you know what other local advisers are charging for similar work.

You can find details of our charges here

Do your homework and be thorough. It’s important to find the right Financial Adviser for you.

Talk to a Financial Adviser

Free Resources

You will need to speak to a professional but if you are considering transferring your Final Salary Pension, there are a number of free resources we would encourage you to take a look at.

The Pension Advisory Service (TPAS) 

Set up to provide free professional, independent and impartial help with their pensions

Pension Wise

A government website providing information about the Pension Changes and options for Personal Pension Holders and those with workplace pensions.

Money Advice Service

A great resource for money advice. It also contains a handy budgeting tool.

Pension Protection Fund (PPF)

Provides details about the scheme set up to compensate those with Defined Benefit (Final Salary) Pension Schemes if their scheme collapses.

We’ve also written some helpful pieces on our blog including ‘How much do I need to Retire’

TALK TO A QUALIFIED PENSION SPECIALIST

Sometimes it’s just nice to talk to a human. Especially when that person is a Qualified Pension Transfer Specialist with experience of Final Salary Pension Transfers. We offer a free, no obligation, 20-minute call with one of our specialists. Pick our brains, get your questions answered and find out how to get started or arrange an introductory meeting to get the ball rolling. Call us on 02380 981161 or contact us below.

Contact us
What happens to my Defined Benefit Pension if my employer goes bust?2018-01-17T15:07:55+00:00

A Defined Benefit Pension, AKA a Final Salary Pension guarantees to pay its members a defined amount per year, for life. However, it’s a common concern “What happens to my Defined Benefit Pension if my employer goes bust?”

The answer is that it depends on the circumstances and what is agreed between the Pension Scheme Administrators and its members and/or whether there is any government intervention. The likely outcome is, if your Final Salary Pension Scheme is eligible, that you may be protected by the Pension Protection Fund (PPF) which acts as an insurance policy should your employer’s pension fund get into trouble or if the business goes bust in the future. You’ll generally receive a maximum of 90% of what your pension was worth at the time, up to £34,655.05 per year, a figure set by the Department for Work and Pensions (DWP). 

You can find out more on the Pension Protection Fund website or read our blog post What is the Pension Protection Fund

What happens to my Final Salary Pension if I die?2018-01-17T15:09:31+00:00

It’s a big concern for some people, ‘what happens to my loved ones if I die?’ Will they be provided for?

Whilst you cannot transfer the full amount of your Final Salary/Defined Benefit Pension fund over to a Spouse if you die, There’s normally a provision made by the Pension Scheme Administrator for a Spouse and dependent children. The amount they will receive varies from scheme to scheme.

If you’re not married and don’t have dependent children then your pension pot gets absorbed back into the employer’s pension fund when you die. Unlike a Personal Pension, you cannot pass it on or nominate someone to inherit it.  

** December 2017 update – due to a successful legal challenge it may now be possible for ‘common-law’ partners to make a claim for part of your pension if you die. see the links below for details of the cases

Unmarried woman wins automatic right to late partner’s pension

http://www.telegraph.co.uk/news/2017/02/08/unmarried-woman-wins-automatic-right-late-partners-pension/

Same-sex couple win landmark Pension Equality case

https://www.ftadviser.com/pensions/2017/07/12/same-sex-couple-win-landmark-pension-equality-case/

How do I get a Pension Transfer Estimate?2018-01-17T15:10:18+00:00

Your Pension Fund amount and the Transfer amount (known as the Cash Equivalent Transfer Value or CETV) are not the same thing. You should receive an annual update from your Pension Scheme Administrator that contains this information but if you do not have an up-to-date estimate you will need to request your Cash Equivalent Transfer Value (CETV) from your Pension Scheme Administrator

People who receive financial advice are on average £40,000 better off than their unadvised peers

Research by International Longevity Centre-UK (ILC-UK), 2017

9 in 10 people were satisfied with financial advice received, with the clear majority deciding to go with their adviser’s recommendation.

ILC-UK, 2017