72 Money Matters By Sharron Sandey, Mortgage Advior & Senior Financial Adminitrator at SW Law Swop shop
The financial regulator the FCA has raised concerns that thousands of consumers are being wrongly advised to cash in their defined benefit pension. This puts those consumers at huge risk of financial insecurity in old age.
A defined benefit pension plan (for the uninitiated!) is a type of pension plan in which the employer promises a specified pension payment, lump sum or combination on retirement. The magic behind it is that the amount is pre- determined by a formula based on the employee’s earnings history, tenure of service and age rather than depending directly on individual investment returns. The FCA note that the advice was
a defined benefit pension can access a lump sum is by transferring to a less attractive defined contribution scheme. The returns of these schemes are linked to the stock market rather than salary and the consumer will ‘cash out’ instead of taking an annuity. Often specialist firms that look at
Deciding whether to transfer out of a DB scheme is one of the
most complex financial decisions a consumer will have to make
given despite being unsuitable for many consumers who opt to take a lump sum by transferring to poorer value stock market linked schemes at the expense of a guaranteed income for life. Under current rules the only way a consumer with
transferring the schemes look at it from the position that the transfer is not suitable with the premise that this needs to be proved incorrect. It certainly is a matter of great complexity and specialist knowledge is required. Deciding whether to transfer out of a DB scheme is one of the most complex financial decisions a consumer will have to make and it is vital customers get
high quality advice. Whilst SWLaw Investment & Financial Planning can
provide advice on pension swaps, it is better to be safe than sorry.
SWLaw Investment & Financial Planning 01752 205205 Everybody makes plans - new job, new house, holidays…
But what about planning your financial future? This can be complex and daunting.
Looking to invest a lump sum?
Do you need an income from your investments? Is your pension on track?
Worried about inheritance tax? Want to reduce your tax burden?
We can help
Friendly, no cost, no obligation consultation CALL US NOW! 01752 205205
Kingsley Close • East Way • Lee Mill • Ivybridge • Devon • PL21 9GD SWLaw Investment & Financial Planning Ltd
Registered in England. Company Number 03462625 Authorised and regulated by the Financial Conduct Authority. Firm No 222033
swlaw.co.uk Financial Advert
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