Swapping your final salary pension scheme for cash has become more attractive because of the new pension freedoms. But some savers are being offered far better deals than others.
Savers with final salary pensions – where employers guarantee a retirement income – are widely envied by people with less generous arrangements.
But a lucky few could be about to become the source of new-found jealousy among the “gold-plated” pension community.
This is because when it comes to asking their scheme if they can take a “transfer value” for their pension – instead of waiting and taking the pension itself – some people are being offered far more money than others. And this is the case even where similar levels of pension income have been promised.
The issue is hugely important right now, as pension savers prepare for the reforms coming into effect from April. These will allow “money purchase”, also known as “defined contribution”, pension savers to access their cash at once from age 55. But savers with final salary schemes could access their benefits in cash form only if they first request a transfer value and move the money.
Calculations for Telegraph Money, based on real transfer values requested by employees over the past few weeks, have revealed that the best offers would swap annual income of £30,000 for £900,000 in cash, while other firms are trading in the same guaranteed income for £450,000. These figures are for a 55-year-old who plans to retire at 60.