Andrew from Vista Financial

Huge Increase in Final salary transfer values

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    Hello

     

    I thought that I would write something on this as it could potentially be relevant to a lot of people who have Final Salary Pension schemes.

     

    As of last October there was new legislation introduced in the UK for Pension fund trustees regarding calculating transfer values. This meant that there was a new preferred method for trustees to use when assessing transfer values for people looking to transfer out of the schemes.

     

    The idea behind this was to make it fairer to members of the scheme.

     

    Initially without knowing what effect this would have I personally thought that it might mean a lesser transfer value amount so as to protect members remaining in the scheme as there are a lot of final salary schemes currently in deficit.

     

    However since December the new calculation method has come into effect all of the new transfer values I have been sent have increased massively. There has generally been an uplift in value of around 20%!!!!

     

    In one case this uplift was 25% resulting in a 22,000 GBP gain!!

     

    I would therefore suggest that anyone who may have previously sought values to assess whether they wish to move their fund across prior to October 2008 to revisit this area as it could have a big impact on the outcome now.

     

     

    Hope this helps.

     

     

    Regards

     

    Andy

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    As a retired Financial advisor, and ex Pension Scheme Trustee, who is already drawing his pension, I would like to Thank Andrew for this article. Many people are financially unaware of how their pension schemes work, and many could benefit from this piece of information.

    In my opinion, the biggest problem many new arrivals face is in deciding if their lives are to be permanently in Australia, or will they one day return to the UK, and maybe draw their deferred pensions there, as it could prove quite costly to move them to Australia into a personal pension or Super Fund, and then later decide to move them back to the UK, where it would be necessary to re-invest in a personal pension there, as the option to return to their companies Final Salary scheme would have been lost for ever.

    I guess that as more and more companies are doing away with Final Salary schemes, and many of the folk emigrating are younger, then the luxury of Final Salary Schemes have probably never been offered to them.

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    Hi Clare.

     

    There are definitely advantages to having Superannuation in Australia than the UK but there can also be disadvantages as well.

     

    To the question "is it worth moving it?" That depends on your individual circumstances.

     

    The intention to remain in Australia probably the most important.

     

    I would be more than happy to meet with you for a free intial consultation and can also discuss fee's etc with you at the time if you wish to continue with my services.

     

    Feel free to contact me in my office on 08 8354 4881 or PM your number to me and I will call you.

     

    Regards

     

    Andy

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    Guest scmercer

    Hi Andy

     

    I just read your post which I found extremely helpful. Would you happen know if the superannuation schemes in Australia are pretty similar to those in the UK? I am moving to Adelaide in August and I have worked for a large UK final salary scheme for the last 8 years. I would be looking to do something similar in Oz.

     

    Thanks

     

    Sheila

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    Hi Sheila.

     

    Final salary schemes both in Australia and the UK are now quite rare. I think even more so here in Australia than the UK.

     

    Personally I think Superannuation here in Australia is more sophisticated than the UK and there are lots of strategies available that enable people to increase there funds and save tax at the same time.

     

    One of the reasons being is that you have access to the full balance if you like, when you reach a condition of release, e.g retirement, this means that superannuation money is more like an investment and as such people tend to take more of an interest.

     

    It would certainly be worth considering moving your final salary pension across as well if you intend to remain in Australia for good, of course needless to say you should take advice on whether it is right for you or not.

     

    Self Managed Superannuation Funds are the fastest growing sector in Australia at present, this is where people with larger balances usually $250,000 and above wish to take more of an active role in where there money is invested rather than leaving it to fund managers and instead decide on what investments they will purchase with the objective being to achieve greater growth, residential property for example being a popular choice. There are strict reporting guidelines when running these types of funds though so seeking the right professional advice is essential.

     

    Regards

     

    Andy

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