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When should you transfer a final-salary pension?

The risks of transferring out of a final-salary pension have recently been highlighted by the financial regulator, but there are instances when it might be worthwhile
February 2, 2017

The risk of transferring out of a final-salary pension has recently been highlighted by the Financial Conduct Authority (FCA), which has warned advisers that if they transfer clients out of their final-salary pensions without proper checks, they could put them at risk.

"We are aware that some firms have been advising on pension transfers or switches without considering the assets in which their clients' funds will be invested," says the FCA. "We are concerned that customers receiving this advice are at risk of transferring into unsuitable investments or - worse - being scammed."

But transferring out of your final-salary - or defined-benefit (DB) - pension is looking more appealing at present due to the soaring transfer values being offered. Low interest rates and gilt yields have pushed up transfer values by as much as 30 per cent in many cases, according to Pat Connolly, chartered financial planner at Chase de Vere, and anyone wanting to cash in a final salary-pension worth more than £30,000 must seek advice under FCA rules.

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