As I mentioned, I've seen people saying "honestly why would anyone bother in putting money into a company pension these days", which is worrying.
Absolutely. That would be crazy. But I’ve also had clients who had accrued an annual pension entitlement of £25,000 per year. Whilst that may not seem a
huge amount by itself, depending on the scheme, it could be worth £1m in transfer value to a personal pension.
Now if the member stays in the DB scheme dies at 64, with a dead spouse and two kids aged 20 and 24 then the kids get nothing at all. If the spouse was still alive then they’d get £12,500 per year until they passed and still the kids would get nothing at all, never mind an amount that would potentially transform their lives and those of their children.
I’m a huge fan of company schemes as free money is free money as you say, my main point was that people should always be educated as to their options.
I have several clients in the Carillion Scheme that didn’t transfer out in time as I hadn’t met them soon enough and they no longer have the option to move their DB scheme, so that despite the fact they’ve now lost a minimum of 10% of their benefits, if they don’t live a long life, then their spouse will only get half their accrued pension income and their grown up kids will receive nothing. Whereas if they transferred out then their kids would have been set for life.
At no point have I tried to actually give advice, I just want people to understand the rules as 95% of the people I speak to don’t when they really should as it’s usually their biggest asset after property (and sometimes surpasses even that!).
But the final time (and despite it being off topic) I’ll say, a defined contribution or money purchase scheme does not fall foul of those rules and they are very positive things to have as part of ones contract.
