Helen – Global Retail Group – Enhanced Transfer Value
“I had just six weeks to make a decision about my pension which would affect me for the rest of my life. My accountant couldn’t help but told me he knew a financial adviser who would know exactly what to do. He described Trentham Invest as being in the ‘super-league’ of advisers. Nicola has an unusual style. She has a very direct approach and is at polar extremes to most other IFA practices I’ve known.”
Helen had received a letter from the trustees of her final salary pension scheme offering her an ‘enhanced transfer value’ if she opted to transfer out. At the time she was 52 and starting to think about retirement and even considering early retirement. However, the trustees wouldn’t give her any advice and she had no idea whether the offer was good or bad or how opting out would affect her personal finances in the long term.
Helen was concerned what would happen to her pension if her former employer got into financial difficulties. She was also keen to take as much tax free cash as possible at the time of retirement.
What we did
Working to a tight timescale we showed Helen what would happen if she chose to stay in the scheme or transfer out. We also highlighted the level of risk associated with each choice and how it would affect her finances if she decided to take early retirement.
- Helen was now in a position to take up to £77,339 as a tax free lump sum upon retirement.
- Had she stayed in the scheme and it was later taken over by the Pension Protection Fund (PPF) due to financial difficulties, her deferred pension would fall from £29,527 to no more than £26,574 per annum.
- If the PPF didn’t accept the scheme, the most she could expect to receive would be £21,748 per annum – a loss of more than 26%.
- Upon her death her husband would now receive £309,358 (less any tax free cash already taken). If she survived her husband the money would go to her children. Had she stayed in the company pension scheme they would receive nothing.
Note: The events and figures quoted in this case study are from a real Trentham Invest client; however, the names have been changed to protect client confidentiality.