You might be surprised at the number of employers who are keen to change their employees from final-salary pension plans into personal pension plans by looking at the financial pages in the national press. Employers are keen to encourage this change and offer a lump-sum cash incentive to those who choose to transfer their pension rights. You can also look for the best pension adviser via jonpurnell.co.uk/.
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Employers are reluctant to move employees away from final-salary schemes because they can be quite expensive. The attraction for employees may be the certainty that comes with a final-salary scheme. This is because it will be clear from the beginning how the pension is calculated, and what it will likely amount to.
However, a personal pension plan will be affected by the performance of the pension fund's investments as well as the unknown variations in the annuity rates. The personal pension plan may do better than or worse than the occupational final-salary scheme. The employee must compare the two to decide whether or not to accept the employer’s offer to give up the security and certainty of a final-salary scheme.
The FSA recommends that anyone considering transferring from one type of pension to another, including a transfer out of a final-salary scheme, consult an independent financial advisor. For example, an independent financial advisor can help you understand the most crucial piece of information that you will need to evaluate the pros and cons of any transfer. This is a necessary step before any comparison of the new and existing scheme can be made.