Defined Benefit Transfers (40 second read)
A defined benefit pension (also known as a final salary pension) is one which promises a pre-defined level of benefit in retirement (such as 50% of final salary), proportional to your length of service, payable until death. The benefit is defined and contributions to the pension (normally made primarily by the employer) are not defined.
The Defined Benefit pension used to be considered the Rolls Royce of pensions however in recent years many Defined Benefit schemes have become insolvent (their calculated liabilities are greater than their assets) due mainly to people living longer and annuity rates being lower (which increases the cost of providing benefits). Some schemes have been wound up and some have reduced benefits. As such, for some people these schemes have only created the illusion of security in retirement.
If you’ve been offered an enhanced transfer value you should seek advice immediately and ensure that you meet any deadlines specified.
Taking a transfer value will give you greater flexibility regarding how you can take your benefits and it will mean that your capital is preserved for your dependents in the event of your death.
Due to the number of variables involved the only valid way to determine the correct decision is to model your finances in both scenarios. You can find out more about Cashflow Modelling here.
If you ask us to review your Defined Benefit scheme we will;
- Inform you of what benefits your scheme will provide in retirement and what retirement options you have.
- Show you the retirement options you have if you take a transfer value out of the scheme.
- Assess the adequacy of your transfer value and show you the return you would need to achieve from investing it in order to match the pension promised by the scheme.
- Explain the pros and cons of taking a transfer value.
Contact us today on 01 546 1100, by email to [email protected] or book a no-obligation Zoom call with us here.
For more information on the pros and cons of staying in or leaving a Defined Benefit Scheme please read this blog post.
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The material and information contained on this website is for general information purposes only. Neither the writer nor Highfield Financial Planning Ltd makes any warranty as to the completeness, accuracy or reliability of the information or the suitability or availability of products or services, referred to on the website, for any purpose. You should not rely on any information contained on this website as a basis for making any financial, legal, taxation or other decision. The information presented does not include all the considerations which are relevant to the topic discussed as to do so would render it un-readable. When considering any financial issue you should seek the advice of a suitably qualified adviser.
BOOK A FREE NO-OBLIGATION CHAT
By Telephone 01 546 1100
Use the Form on this Page
Email to [email protected]
Book a Zoom call with us here.
Happy to start the process? Click here to complete a factfind and tell us your objectives
The material and information contained on this website is for general information purposes only. Neither the writer nor Highfield Financial Planning Ltd makes any warranty as to the completeness, accuracy or reliability of the information or the suitability or availability of products or services, referred to on the website, for any purpose. You should not rely on any information contained on this website as a basis for making any financial, legal, taxation or other decision. The information presented does not include all the considerations which are relevant to the topic discussed as to do so would render it un-readable. When considering any financial issue you should seek the advice of a suitably qualified adviser.
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About Highfield Financial Planning
We provide superior advice on Financial Planning services to business owners, professionals and their families. The principal of the firm Eoghan Gavigan has over 27 years’ experience in banking and finance across Treasury, Lending and Wealth Management and is a Qualified Financial Adviser (QFA) and a Certified Financial Planner (CFP). The CFP qualification is the world’s most respected industry designation, held by only a select number of advisers. As Specialist Investment Advisers we can provide you with detailed investment advice on your pensions and investments.
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