In the last couple of years more than 200,000 people have taken the big decision to transfer the rights they have built up under a final salary pension scheme into a different sort of pension arrangement. But how do you know if the amount of money you are being offered in exchange for your old pension is good value?
It seems that almost every day we read another story about how we are not saving enough for retirement. The government’s official figures suggest that about 12 million of us are not putting enough by to enjoy the sort of retirement we would want for ourselves.
In 2014, when the chancellor at the time, George Osborne, announced new pension freedoms in his Budget, there was a very positive reaction. No longer would people be forced to turn their modest pension pot into an income for life. Instead, they could choose from a range of options, including taking the whole pot as cash or continuing to invest their pension savings through their retirement.
One of the great advantages of automatically enrolling people into a workplace pension is that they haven’t really had to think about pensions to get there: unless they actively opt out, they start building up a pension pot. But the dilemma is how you turn a passive saver in their 30s and 40s into an engaged and informed saver in the run-up to retirement, able to tailor their retirement plans to meet their particular circumstances and needs.
Steve Webb explains why it’s right, more often than not, to stay in a final salary scheme.
Uncertainty around future care costs means it makes sense to buy an insurance policy to protect against future bill.
When big companies such as Carillion or BHS go to the wall, there is understandable concern about the jobs of the many people working for such firms. However, there are likely to be many more people – former employees as well as existing ones – worrying about whether their pension is at risk. Insolvencies raise some crucial questions for people generally, about how safe their company pensions are and what happens if their employer goes under, leaving the pension fund short of cash.
Auto-enrolment is being rolled out at such a gradual pace that many workers will miss out on adequate pension provision.
Pension lump sum withdrawals are treated on an ‘emergency’ basis by HMRC. It is up to pensioners to claim the money back.
Three million members of final salary pension schemes have 50 per cent chance of eventually receiving their full pension.