Pension transfers can be complicated and you should always seek professional financial advice before going ahead. Remember, whether a transfer is suitable or not will very much depend upon your individual circumstances and objectives.
In December 2006, the former Government published a White Paper outlining its workplace pension reforms, including proposals for NEST (the National Employment Savings Trust) – previously called Personal Accounts. This led to the Workplace Pension Reforms set out in the Pensions Act 2008. These reforms aim to increase individuals’ savings for retirement.
Your employer is currently required to offer you the chance to join a pension scheme if they currently employ five or more employees. If an occupational pension is not provided, then this would normally be a Stakeholder Pension Scheme or alternative Personal Pension Scheme. The requirement for employers to provide access to Stakeholder Pension Schemes is regulated by the Pensions Regulator.
Salary sacrifice (sometimes known as ‘salary waiver’) in the context of retirement planning is a contractual agreement to waive all or part of an employee’s salary in return for the employer contributing a preferential (equivalent) sum into their pension plan.
From 6 April 2011, private sector Final Salary Pensions need only be uprated in line with the Consumer Prices Index (CPI) rather than the Retail Prices Index (RPI). Typically, CPI runs below RPI and, consequently, over time this could mean some final salary members experience a reduction in their retirement income.
Occupational pension schemes vary from company to company. Your scheme is likely to be one of two general types, Final Salary related or Defined Contribution Scheme.
The number of private sector workers with a company pension has fallen to its lowest level since the 1950s according to figures from the Office for National Statistics (ONS). Of the total private sector workforce of 23.1m, only 3.3m – some 14 per cent – are in a company scheme. This contrasts starkly with the public sector, where almost nine in ten will receive a pension.
Only 51 per cent of British workers are saving adequately for old age, according to the latest annual Scottish Widows pension report.
For many years the age at which you can claim your State pension benefits has been 65 for men and 60 for women. But the previous Labour Government set out plans, based on recommendations from Lord Turner, to steadily increase the State pension age to 68 for both men and women over the next four decades.
Nearly a quarter of the UK population is currently over the State pension age, according to United Nations figures. The same analysis predicts this will rise to almost 30 per cent by 2030.