Final Salary transfer

The problem

Harry got in touch because he had a significant Final Salary pension fund that he wanted to transfer.

He was confident that this was appropriate for him but wanted to clarify this notion with the help of an appropriately qualified and regulated financial professional.

It was important for Harry to have control and flexibility with his pension, as he wanted to draw down income as and when it was needed. He was also concerned about financial security for himself and his wife Sarah during their lifetime, as well as for their children upon the couple’s death.

The process

We took time to understand Harry’s motivations for transferring his pension fund.

We ensured that he understood the disadvantages of doing so; namely, giving up a guaranteed inflation-linked pension for him and his wife Sarah on his death.

Following the structured financial planning process, we considered the short and long-term implications of transferring his pensions and compared them to different scenarios. This included the effect that repeated stock market crashes would have on this wealth, compared to the Final Salary pension income that would not be exposed to stock market volatility.

We also analysed whether Sarah would be better or worse off as a result of Harry transferring his final salary pension.

Harry also wanted advice and recommendations on a suitable portfolio in which to invest the transfer funds and a strategy to phase the money into the markets.

The outcome

We concluded that a transfer was appropriate.

We based our conclusions on Harry’s lifetime priorities and the context of his overall financial position.

We were then able to assist Harry in the transfer process by confirming he had been advised to take this course of action.

We also advised Harry on a pension strategy, based upon our investment philosophy. We meet on a quarterly basis to make sure everything remains appropriate.

Harry's response

“I started out very much thinking this was simply a regulatory hurdle to jump, but Andrew approached the process with demonstrable professionalism: he captured the detail behind a very complex situation, helping me to consider the alternatives with rational clarity. I found his surfacing of risk and alternatives very useful indeed, and he demonstrated a very high ability to listen and pick out key facts and details of relevance. I found someone who helped me action a very significant decision with confidence so that I really did know what I was doing, I understood the risks I was taking, and that I was acting properly within the context of my personal life objectives rather than simply meeting a discrete financial objective.”

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