10 months to seek advice about your pension
Is it time to go private with your pension?
If you have a final salary pension you will already be aware of its benefits. Your income is pre-defined and you can rely on it for the rest of your life. However, with the changes made in the last budget it may be in your interest to transfer your final salary pension into a private one.
Why? You may ask.. If you transfer to a private arrangement then from age 55, with help from your adviser, you can effectively design your own retirement. In short, you can tailor your pension to suit your lifestyle, whether that bespending more money earlier In retirement and be conservative in later life, or considering health issues a private pension is designed by you.
Should you have a private pension, In the event of your death, your next of kin could receive a tax efficient lump sum.
Furthermore, a private pension allows you to access 25 – 30%of your fund totally tax free, depending on your country of residence your pension income could also be highly tax efficient.
It’s true, a final salary is safe and steady, and however you will never see a rise in income past the rate of inflation. By considered investment you could see pension pot supersede inflation rates.
So, why transfer out now? As we established, final salary schemes, need to be consistent, for this reason they encourage investment in secure options, like… government gilts. Should people take advantage of the situation and start transferring out of final salaries, the knock on effect will no doubt leave the government feeling the pinch, from the loss of investment from funds they have become reliant on.
Timing is everything, should the recent proposals come into force then from April 2015 you can access your pension in itsentirety from the age of 55; that gives you 10 months to seek advice and find out whether transferring your final salary pension into a private one will allow your pension to work better for you.