Since 1973 there has been a series of acts that have sought to improve member’s pension rights for private sector companies, specifically in the area of benefits accrued in an occupational scheme for early leavers.

This has meant that employees with more than 2 years service have the right to leave there accrued pension with the scheme as a deferred pension. These benefits must be revalued, the formula is set down in law and will apply between the date of leaving and the scheme retirement age based.

However an individual may wish more control over their accrued pension benefits and opt to transfer their fund to an alternative arrangement. Specialist advice is required in this area, clients need to be made aware of the implications of a pension transfer, which will vary depending on the nature of the pension arrangement involved. Many people move their preserved schemes, the most popular reasons are to potentially gain better performance, obtain advice, consolidate all their pension pots or to benefit from a potential lower charging structure.

The amount of cash accumulated in a pension from a previous employment is called a transfer value and will either reflect an actuarial assessment of the preserved benefits revalued to retirement (defined benefits) or the value of the pension fund (defined contributions). All potential pension transfers from final salary occupational schemes will need to assessed using a transfer value analysis system, this calculates a critical yield (growth rate of the fund) which the new scheme must achieve to match at retirement  the benefits provided by the final salary scheme. This tool was prompted by unscrupulous selling of pension transfers from final salary schemes in the early 1990’s, the whole arena of transfers is closely policed to make sure that clients are fully aware of the financial implications so they are able to make an informed choice.

At FA, we ensure the advice given is correct for you by having three assessments made of the transfer and all three parties are to agree that this is best advice before we transfer you. Your consultant is the first check, our internal Pension Assistance Service is the second check and then we pass the details to our Network who then provide the final check. This is an important reason why you should utilise FA for your pension advice, three checks are better than the normal one made by most of our competitors!

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