Pension transfer warning

The new pension freedoms available next April – including the ability to hand on capital tax-free to family members for those dying before age 75 – won’t be available to people in final salary pension schemes, says the Times.

If they take the pension from their scheme, it will last only as long as they or their spouse do – there will be no capital to hand on. Yet a £50,000 a year pension is worth about £1 million. So should people in final salary schemes (apart from government employees in unfunded schemes, who aren’t allowed to) consider transferring their pots?

We think this will rarely be worth doing, but if you are in poor health, then having the capital rather than a lifetime income might be to your advantage. Advice, taking account of all of the implications will be essential before making any decisions.