Defined benefit transfers

Transferring out of your final salary scheme can be life-changing in two very different ways. Get it right and it can allow early retirement and greater financial flexibility. However, get it wrong and you could face the financial disaster of running out of money in your retirement.

With this in mind, here’s Equilibrium’s top five points to consider for those thinking about a transfer.

  1. Speak to an adviser before inquiring about your transfer value

You will need the advice of a trusted adviser to make a truly informed decision on whether a transfer is the right choice for you. A good adviser will want to get to know their client’s circumstances in as much detail as possible before making a recommendation. You only have 90 days to make your decision from the date you receive your cash equivalent transfer value; it’s therefore best to get in touch with an adviser before requesting your transfer value to allow yourself as much time as possible to assess your circumstances and objectives.

  1. Educate yourself

Transferring a final salary scheme means giving up the promise of a guaranteed income for life, so being fully aware of the risks of taking a transfer is important. There’s a whole heap of information on final salary transfers that’s available to you, but this can actually be rather overwhelming. Equilibrium’s service is segmented into four steps to make the mounds of information that will be discussed a bit more digestible and to make sure that you fully understand the facts and the reasons for any recommendations we make.

  1. Is this suitable for you?

Suitability comes down to a number of things including what income you require and what other assets and/or provisions you have for retirement. Have you ever invested before? What kind of attitude do you have to risk? Can you afford to lose money if the value of your pensions falls (because it will at some point), would you feel comfortable watching your pension value go down as well as up? Your adviser should take all these questions and more into account when considering a Defined Benefit Transfer.

  1. Crunch the numbers

Look at the specifics of the scheme – how generous is the transfer value? It may seem like a big number on paper, but if you transfer it has to last until you die, so it’s important to know what returns you’ll require to sustain your lifestyle and meet your objectives. As part of our review service, Equilibrium uses a cashflow modelling system to stress test your future finances, looking at possible outcomes both in and out of the scheme.

  1. A transfer is just the beginning

If a transfer is suitable and you decide to proceed, it’s important to be aware that the decision is only the first step in a lifetime of financial planning. You will need to manage your funds responsibly to ensure that you have enough money for as long as you live, don’t forget there are no guarantees and no going back once you have transferred. Equilibrium provide an ongoing holistic financial planning service to help you manage your financial future.

If you’d like to learn more about Equilibrium and their defined benefit pension transfer service please click here.

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