Final Salary Pension Advice
The age of final salary pensions may be coming to an end, which means a lot of people are anxious about their pensions. Defined benefit pensions have traditionally meant a guaranteed income for life, and these pensions usually depend on your employer’s final salary scheme. These schemes are disappearing, and this means many workers will have to rely on a defined contribution pension instead, or nothing at all.
A Final Salary Pension is a guaranteed income paid for the rest of your life, based on how long you worked for your employer and your final salary.
Your monthly pension payment may be based on the final salary you earned when you left work. But over the years your salary was likely adjusted up or down in line with inflation, and cannot be predicted how much your final pension will be.
Often the money-saving option for an employer that springs to mind is the switch to a defined contribution pension scheme. However, it’s often not that simple.
Not only can the switch to a defined contribution pension scheme be costly, but many people who opt for a defined contribution pension scheme find that their retirement years are spent worrying about the value of their pension pot and whether this will generate sufficient income in retirement.
Luckily, there are options that are quicker and easier to set up than a final salary pension scheme, and many people do choose one of these options.
Actuary reveals top draws for final salary pensions and spells out a range of options to consider as pension freedoms take effect. Final salary pensions – also known as ‘defined benefit’ or ‘career average’ pensions – provide guaranteed income for life based on an employee’s final average salary throughout their working life.
Get in touch with the best financial planners for final salary pension assistance.
Final salary pension schemes
Final salary pension schemes in the UK are a type of defined benefit pension scheme where, instead of a pension pot being invested, the worker’s final salary is paid to them during their lifetime.
People of working age are worried. Pension savings are dwindling. During the age of pensions, old age was an inescapable certainty. But people want new incomes as they reach retirement age. However, with defined-contribution pension schemes, savings cannot always replace the guaranteed payments from final salary schemes.
Conclusion
Overall, if you have concerns about your pension, it is best to get professional financial advice or assistance at Future Planning.
