Is your final salary pension at risk?

The provision of defined benefit pension schemes has been waning in UK over the past 20 years, almost to the point of extinction. It used to be standard that you would qualify for a pension that was determined by your final salary on retirement and the number of years of service at the company. However, these schemes are rarely offered to new employees anymore and those that do increasingly find theirs at risk of change.
Over 3 million final salary pension savers have just a 50% chance of receiving their benefits in full, as warned by the Pensions and Lifetime Savings Association (PLSA). According to the PLSA, the bulk of final salary or defined benefit (DB) pension schemes, which have 11 million members within the UK, look sustainable despite the fact that the deficit for final salary schemes has stood at over £400 billion for the past decade. For the weakest schemes, “millions of people’s retirement incomes are now at risk”, thanks to a mixture of factors: increases in life expectancy, record low interest rates and lower investment returns.
According to a survey of advisers carried out by Royal London, the volume of transfers out of final salary pension schemes has grown by over 50% in the last year. Advisers claim that transfer values for those cashing in their plans are typically between £250,000 and £500,000. Royal London points out that this is greater than the average UK house price – currently £233,000.
Transfer values have risen so dramatically because yields from bonds – in which final salary and defined benefit pensions are predominantly invested – have fallen to record lows. Low bond yields increase the cost to pension schemes, as they need larger funds to produce the same income, which is why they are keen to reduce their liabilities and get pension savers with financial salary pensions off their books.
The attraction of transfers have also been boosted by rule changes allowing cash to be taken from a pension from age 55 and residual funds to be bequeathed on death. Of note, current rules mean that if your transfer value is worth more than £30,000 you must seek financial advice first.

What our clients say about us:

Stephen, Kent
Stephen, Kent
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James took the time to make sure he understood my circumstances before giving me some excellent advice on how I could maximize the tax efficiency of my investments and thus my retirement income.
John, London
John, London
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James was incredibly understanding about what goals I wanted to prioritize. The key, for me, was to have it explained in simple terms. This enabled me to take out the right personal protection and pension plan. Trust is probably the most important part of this process. I felt/feel confident that James helped me make the right plans to safeguard my family’s future.
Peter, Tunbridge Wells
Peter, Tunbridge Wells
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James was highly professional and set me up with an investment plan that fit my needs and risk appetite. 5 out of 5 Stars
Joseph, London
Joseph, London
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I had multiple pension pots from previous employers and was looking for advice on whether to consolidate these plans. James undertook an honest and detailed analysis of my policies allowing me to make a fully informed decision on the best way to proceed. Highly recommended.
Matthew, London
Matthew, London
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I was looking to set up a pension plan as I had been given a generous allowance from my company. James advised on product and fund selection tailored to my personal circumstances and attitude to risk. Once the correct product had been identified. He facilitated all areas of setup and continues to manage things moving forward. 5 out of 5 Stars
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We’re delighted to announce that Quilter Financial Planning has achieved first place in the FTAdviser’s annual Top 100 Financial Advisers list.

We’re very proud of winning this award, which recognises not only the growth of our Network over the past year, but also our continued commitment to providing quality face-to-face advice.

We’ve always known that we have the very best advisers in the market – and we’re delighted that winning this award underlines that.

HALCYON WEALTH LIMITED (Financial Conduct Authority No. 758949) is an appointed representative of Quilter Financial Services Limited and Quilter Mortgage Planning Limited which are authorised and regulated by the Financial Conduct Authority. Quilter Financial Planning Limited and Quilter Mortgage Planning Limited are entered on the FCA register under reference 440703 and 440718. The guidance and/or advice contained within this website is subject to the UK regulatory regime, and is therefore targeted at consumers based in the UK.