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Learn the Pros and Cons of Transferring Your Final Salary Pension

— August 25, 2021

It’s also important to note that transferring a final salary pension is a lengthy process and can be complicated, which is why you will need expert help.

One of the main reasons so many people prefer final salary pension schemes is that they have the opportunity to transfer out of it and get a specific amount of money in return. That makes it a flexible pension scheme and one that is fit for people of all types and salaries. It’s difficult to find out how things will work out for you if you transfer out of your final salary pension. 

We are sharing the pros and cons related to this decision, which will allow you to compare whether it is beneficial to transfer out of a final salary pension scheme. You can learn more about some of the advantages and disadvantages of transferring a final salary pension below. 

The Advantages of Transferring a Final Salary Pension 

Most people prefer transferring their final salary pension because it gives them greater control and freedom over their money. However, there are more pros you should know about, which include:

  • The ability to access your pension fund before you retire. 
  • You may vary the income from your pension if you want to. 
  • Your beneficiaries can inherit your unspent pension and won’t need to pay inheritance tax. 
  • You could end up with more money if the stock market performs well. 
  • Your pension won’t be at risk if your employer goes out of business.

    Two men with laptops reviewing paperwork; image by Helloquence, via
    Image by Helloquence, via

As you can see, there are numerous advantages of transferring a final salary pension, which allow you to have more control over your finances in your retirement.

The Disadvantages of Transferring a Final Salary Pension 

Even though transferring your final salary pension does provide you with plenty of pros, there are some cons you should consider. These include the following:

  • You will be trading your guaranteed income for life for a pension fund that may run out. 
  • If the stock market fails, your pension fund will be at risk. 
  • You will need to pay for professional advice to find out how to transfer your final salary pension.
  • You will have complete responsibility for the management of your pension fund. 

The best option for you regarding transferring your final salary pension will depend on how these pros and cons personally affect you. Everyone has different circumstances and if transferring it worked for your colleague, that doesn’t mean it will work out the same way for you. 

What’s the Best Thing about Final Salary Pension Schemes?

Most people want to retire in comfort and would benefit from a stable income in the golden years of their life. That is where final salary pension schemes prove to be an invaluable source because you don’t need to worry about money coming into your account. However, sometimes having money in hand that you can invest in the stock market or in a small business can be beneficial as well. 

There are pros and cons to doing this with your final salary pension, and that depends on your individual situation. Most people find that they have more freedom to spend and use their money after they transfer the funds into their account. However, others won’t like taking risks with their money in retirement, which is why they wouldn’t want to transfer it from their account. 

You should make your decision after taking on board financial advice from experts who have knowledge and experience in transferring final salary pension schemes. They would be the best place to guide you and help you make the right choice. At the end of the day, it will come down mainly to your financial situation and how you want to use your funds in retirement. 

It’s also important to note that transferring a final salary pension is a lengthy process and can be complicated, which is why you will need expert help. You will need to weigh the pros and cons and read more before you decide what investment strategy is suitable for you after the money has been transferred into your account. 

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