There are many pension options available and for those leaving a scheme or changing employment before retirement, it is really important to be aware of all the alternatives. It is essential to take advice at least 18 months prior to retirement because complacency regarding your pension scheme is likely to lose you a lot of money. AEON can help you make an informed and advantageous decision.

Occupational Schemes

Deciding on the best pension for your circumstances is vital and you must consider carefully the pros and cons of each option.

Defined Benefit (DB) Pension Schemes

This type of defined benefit, also known as final salary scheme guarantees to pay you a pension based on your salary and the number of years you have been a member. If you leave the pension with the employer, the employer guarantees to pay a defined pension benefit at your normal retirement date. Therefore, transferring out of a DB scheme is a decision that should be carefully considered. Many advisory firms do not have authority to advise you on this type of transfer but fortunately AEON is able to give you advice.

There are a number of reasons why you might consider transferring from this ‘Rolls Royce‘ of pensions. pension-cartoon-2Some examples are:

  • Sharing your pension because of divorce
  • Early retirement
  • Accessing the tax-free lump sum
  • Releasing money into your business
  • Buying business premises
  • Serious illness – there may be disadvantages in leaving the scheme with a previous employer
  • Enabling someone other than your ex-employer to inherit the pension which is important if you do not have a partner or other financial dependents.

Defined Contribution (DC) Pension Scheme

Transferring from a DC scheme or personal pension is far less problematic because you have accumulated an individual pension pot and can invest this elsewhere when you move. You may want to transfer to achieve more growth, consolidate a number of small pensions into one scheme, to improve death benefits or to obtain guarantees.

There are several factors that need to be considered:

  • Do any guaranteed annuity rates apply?
  • Any there any underlying growth guarantees in either the new or the previous scheme?
  • Does the plan provide you with any enhanced tax-free cash options?
  • What charges apply to the new and ending schemes?
  • What are the investment options?
  • Would you benefit from consolidating various pension schemes?

Irrespective of the type of scheme you own, you should take advice to establish exactly the best home for your pension fund. Do not delay taking advice because it could be costing you or your dependents a fortune! Contact AEON today for a free no obligation meeting.