Select Page

Reasons to leave existing pensions where they are: final salary benefits

If any of your old pensions is a final salary or defined benefit type, it will virtually always be best to stick with it – you will almost certainly get a guaranteed risk-free income that rises every year in line with inflation and which is partially transferred to your spouse if you die first.

However, it is often possible to swap final salary benefits for a cash lump sum (the main exceptions are unfunded public sector schemes, which means most except those run by local authorities).

The sums paid can be generous – in some cases in mid-2017, private sector employers were offering 40 times the promised annual pension to those who wanted to leave the scheme – so you may feel that you will be able to generate a higher income from such a sum than you would get under the terms of the pension.

However, you would be giving up the guaranteed income for life. This is an area where advice from an expert (see our article on advice) is probably needed (and is often required by law in any case). At the very least, think extremely carefully before giving up final salary entitlements.

<< Back to: Are there any reasons to keep your existing pensions where they are?

 

If your friends would find this page useful, share it with them using the buttons below left (if you use the email button, ensure you tick "I'm not a robot" before you fill in the other fields).

Do you have a question or would you like to give feedback about this website? Email us at at pensincinv@gmail.com   

*Links marked with an asterisk can earn money for this website: the company involved may pay us commission if you follow our link to its website or transact on it. This does not have any effect on what we write. 

Nothing in this website constitutes personal financial advice. Its contents represent journalistic research and readers should ensure that any course of action they consider as a result of anything that appears on this website is appropriate to their own needs and circumstances, if necessary with the help of a financial adviser regulated by the Financial Conduct Authority. All investing involves risk: ensure that you understand the risks before you proceed.

Copyright © Richard Evans, 2019-20