New freedoms for those with final salary pensions

Advice from J Finance on reviewing your pension plans in light of rule change

THE rules on how you can access your defined contributions pension savings from age 55 have changed.

You may have seen last month’s piece in on pension ‘freedoms’ and, for those individuals in a final pensionable salary scheme, there’s never been a better time to review your pension plans.

For further information on pension freedoms and the changes that came into effect in April 2015, please visit: www.gov.uk/government/news/ pension-changes-2015.

Since running the piece in and mailing its own clients, J Finance Ltd has had a really positive response, with people keen to find out more, with a view to taking advantage of these new ‘freedoms’.

Jonathan Bright, managing director of J Finance Ltd, said: “There has been an increase in the number of people looking to transfer to a personal pension arrangement and take advantage of these new freedoms.

“If you’re in a final salary pension, you can usually transfer to a personal pension as long as you’re not already taking your pension.”

If you have a final salary pension, effectively you own a deferred annuity.

Annuities are insurance contracts that give guaranteed income payments, but are inflexible, lock in current interest rates and lock out further investment opportunity.

Further, they give you little ability to control your retirement income.

If you want flexible income payments or want more control over your pension funds, then a final salary transfer gives you the option to cash out of a potentially expensive insurance and take advantage of the new flexible pension freedom rules.

Furthermore, as the cost of annuities have soared, so has the cash value of transfer offers, meaning you could benefit not only with the freedoms but also financially.

Clearly there are going to be pros and cons for everyone, but Mr Bright at J Finance is a pension transfer specialist and will make enquiries on about your pension on your behalf, with no obligation and no fee.

Furthermore, the enquiry will not affect your current benefits.

If you have one or more final salary pension schemes, aren’t currently taking your pension and would like to find out more, please contact Jonathan Bright, managing director at J Finance Ltd on (01635) 521 300 or email contact@jfinance.co.uk.

Case Study

* A manager with 17 years’ service, left his final salary scheme in 2000. At age 51, he is offered a transfer value of £803,000.

* Personal pension transfer will allow him to take 25 per cent of the pension fund, tax free, at age 55 to repay his mortgage early.

* Suffering from diabetes, he also feels his wife will have more financial security if he dies early.

“I always understood that a final pensionable salary was the holy grail.

“And it can be for some people, but actually not for me.

“Once I understood what it meant for me and my future, it was obvious I needed to find out more about a pension transfer.

“Jonathan secured an excellent transfer value for me and now we’re planning how to make the best of that money and match my needs in retirement.” DK in Brighton

J Finance Ltd is authorised and regulated by the Financial Conduct Authority reference 442742.