This article was published on: 07/17/18

Why did Tim come to us for advice?

Tim was a self-employed engineer but had decided it was time to retire.

After going through two costly divorces, Tim hadn’t managed to build up any meaningful savings. He also still had an interest-only mortgage, with no repayment vehicle to back it up. This was a big concern to him.

Fortunately, Tim had two deferred Final Salary pension scheme entitlements and wanted to know how he could use them to best fund his retirement.

What did we do?

Once we had discussed Tim’s aspirations at length, it became clear that his income needs would be fully covered by his larger Final Salary pension entitlement. We advised Tim to retain this pension and take the retirement benefits from it.

We assessed the feasibility of transfer with the second Final Salary scheme and discovered that the tax-free cash entitlement was significantly larger than what the scheme could offer.

The results

We transferred Tim’s second Final Salary pension, enabling him to fully pay the mortgage off.

Now happily retired, Tim’s income needs are fully covered by the first pension scheme. The transfer out of the second scheme enabled him to take the higher rate tax-free cash; he can now take income from this fund as and when he requires, allowing him freedom and flexibility.

Transferring out of a Final Salary scheme is unlikely to be in the best interests of most people.

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