If you, a friend or relative or a former colleague has a final salary defined benefit pension of any size, you should read this as you could be facing a very uncertain future.
Crippling Underfunded Defined Benefit Pensions Could See You Very Short Of Money In Your Retirement
The Report On Final Salary Defined Benefit PensionsA detailed report by The Pensions and Lifetime Saving Association on final salary defined benefit pensions reveals two thirds of final salary defined benefit pension schemes are in deficit, putting at risk the pensions of millions of people.
Decades ago, millions of us were looking forward to the security of a retirement funded by a final salary defined benefit pension. In an environment of high interest rate and good stockmarket returns, the ‘guarantees’ promised by these schemes were never in doubt.
Today, the system is very different. Persistently low interest rates, lower investment returns and people living, on average, an extra six years has created a deficit in final salary defined benefit pensions of more than £400 billion.
It’s led to the massive underfunding of final salary defined benefit pensions. As the report concludes:
Much of the UK’s defined benefit system is underfunded. Of the UK’s 6,000 schemes, with 11 million members, just over 4,000 are in deficit. These deficits are getting worse and have been at a level of over £400 billion on a buy-out basis over the last 10 years. In an environment where it is becoming increasingly hard to get the necessary returns on investment, and where employer contributions often seem to be making little impact, this does not seem to be a problem that will resolve itself without help.
You can download the final salary defined benefit report here.
What You Should Do About Your Final Salary Defined Benefit Pension
If any of these situations applies to you ...
You’re no longer a member of the final salary defined benefit pension
You haven’t had your final salary defined benefit pension analysed in the last 12 months
Your defined benefit pension has changed from ‘final salary’ to ‘career average’
... you should request a ‘cash equivalent transfer value’ from your former employer.
That’s because as a result of low interest rates, transfer values have been at record highs.
You might be surprised how much money is available for you to transfer your final salary defined benefit pension scheme to a pension in your own name.
But that alone doesn’t mean you should do it.
You need your final salary defined benefit pension properly analysed by a pension transfer specialist, to ensure it’s the right thing to do.
Best of all, there's no charge to have your final salary defined benefit pension analysed.
Click the blue button below.
Check Out Your Final Salary Defined Benefit Pension Today
There’s far too much money at stake to put this off a moment longer!
Click the blue button above to get started.
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AJ Bell Is Often The Best Value SIPP For Stockmarket Assets
Over time, charges can wipe out a huge part of your fund. We like AJ Bell because there are no set-up costs. If you hold passive funds, which is our preference, or shares, investment trusts, EFTs, gilts or bonds, you pay one small fixed fee no matter how large your fund. And when you come to draw your benefits either as occasional drawdown or UFPLS payments, there's a small charge for the whole year no matter how many times you access your money (many SIPP and SSAS providers charge more than this for each payment). However, you should always compare charges in detail, because AJ Bell could be more expensive than other providers, depending on the type of stockmarket assets you hold.
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