The number of retirement savers transferring away from their workplace direct benefit pensions is soaring.
Around 180,000 savers have switched from a DB scheme to a personal pension over the past two years.
But the switch may not financially benefit everyone, says pension provider Aegon.
To help, the firm has a flow chart for pension savers to navigate:
Source: Aegon
Should you transfer your pension?
“The table sets out some of questions which may help you decide whether or not you wish to seek advice on transferring from a defined benefit or final salary scheme,” said Aegon.
- Mostly green answers mean a DB transfer may work for you.
- One or more red answer means a DB transfer is unlikely to improve your situation, but not that you should not transfer.
- Yellow answers probably mean a DB transfer is not for you.
In each case, the final decision should be considered after speaking to a professional financial adviser.
Why consider a switch?
Retirement savers are switching pensions for lots of reasons.
Popular reasons include pension freedoms opening the door to withdrawing cash from the age of 55 when a DB pension typically starts paying when someone is aged 60 or 65.
Employers are also making huge cash offers to savers who transfer out of their scheme.
Despite some pros, the cons are transferring out of a DB pension could mean giving up valuable lifetime benefits that another pension cannot replace.
