A final salary pension also known as a defined benefit is a special type of workplace pension that will pay you a retirement income for life. The amount an employee receives under a defined benefit pension (DB) is determined by the number of years you have worked for the firm and the income they have earned. It differs from other types of pensions in that the advantages the scheme member will receive from it, such as a particular amount of money in retirement, are guaranteed.

Final salary and defined benefit pensions are typically quite expensive for businesses to administer and as a result they are becoming more and more uncommon. Although, large companies or government entities such as NHS, armed forces, local authorities still provide this kind of pension.

Unfortunately, hundreds of thousands of people across the UK were provided with negligent advice to transfer their final salary pensions into a defined contribution pension plan or into higher–risk personal pensions such as SIPP.

Usually, the advisors failed to explain the benefits that were built up in their defined benefit pension and they failed to explain the effects giving up such benefits will have on retirement.

Some of the benefits of a defined benefit pension are as follows:

 Guaranteed pension,
 Guaranteed Spousal death benefits,
 Protection from the PPF,
 Index linked increases,
 Ill health benefits,
 Investment risk borne by sponsoring employer, Guaranteed lump sum payment

Financial advisors ignored the reality that the transfer of the defined benefit will have a significant impact on the people’s level of living during their retirement because they had no other assets or savings to fall back on, and they made no evaluation of whether the people could withstand the risks of removing the monies. They also, didn’t assess the future income needs or the relative importance of the plan.

If you think you might have received unsuitable advice to transfer your final salary pension,
please contact us.

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