There is a general perception that having a final salary benefit scheme means that your future financial security is safe. However, there are some important facts to be considered including:
- The long-term future of the business – Defined benefit pension schemes rely on the financial stability of the member’s company and a key question is whether or not that company will be in existence when the member reaches retirement age;
- How the Pension is performing – Unfortunately, Defined benefit pension schemes do not always annually increase in value. The performance of the scheme may be far lower than many other pension options, especially when inflation has been taken into account;
- My Pension automatically goes to my wife and children – Probably one of the biggest misconceptions is that your wife or children will receive a member’s final salary pension should the member die. A wife can often receive only 50% of the income a pension member was receiving on death, but even that is not guaranteed in all cases and due to the increasing liabilities that pension schemes are facing, the terms in which a wife’s benefits are paid are changing;
These myths about the Defined benefit pension scheme do not necessarily mean that it is best to move your pension, but it is worth discussing the issues with an independent pension adviser. Checking the details of your pension for your retirement will give you reassurance that you have the best financial planning for your future. You can then enjoy your retirement, doing the things that you want to do, like Jim in Whitstable who gets up early in the morning to dig the mud for cockles. He is enjoying his retirement standing in his wellington boots on the beach, watching the sun rise.
Further information is available on the DPT Financial Solutions website and to speak with Dan Thomas please call 01443 229589 or by email on firstname.lastname@example.org or via our website.