Information packs were posted to all members on Monday 23 March, although we are aware that some of you may not have received yours yet. They are on their way to you but as the Royal Mail is struggling with double the level of absentees because of the Coronavirus, many places are experiencing delay in delivering packages that are larger than a normal envelope. This is why some of you will have received your introduction letter from WPS Advisory Ltd but not your packs. Please be assured that this does not mean they have been mis-directed or lost.

At present, the financial advice on offer is not affected by the Coronavirus. Please ‘phone WPSA if you would like a conversation about your pension options – even if you haven’t received the hard copy of your pack yet.

FIND OUT MORE ABOUT YOUR OPTIONS

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Taking a transfer value

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Transferring the value of your pension benefits out of the Plan to another pension arrangement can provide you with more choice over how you access your benefits and, as a result, give you more flexibility through your retirement.

There are plenty of things to consider, and it will not be right for everyone. Make sure you know what your options are and how each might affect you, before you make a decision. The best way to do this would be to speak to an impartial financial adviser who specialises in pensions.

  • What is a transfer value?

    Your transfer value is the amount of money that is needed to provide you with the promised pension benefit you have within the Plan. It also includes how much it would cost to provide a spouse’s or partner’s pension and any increases that are built into the Plan rules, so it can be quite a large sum of money.

    You can choose to transfer out of the Plan at any time. You do not have to be nearing retirement or even be over 55 years of age, although by law you will not generally be able to access your transferred benefits until you reach age 55.

    You can get a transfer value quote directly from Mercer, the Plan administrator.

  • Your options if you transfer out

    If you choose to transfer the value of your benefits out of the Plan, you can take your money in a number of ways from age 55:

    • Take regular lump sums as and when you need them, leaving the rest invested.
      This is known as income drawdown. It might be an appealing option if you are comfortable with making investment decisions for your pension and want more flexibility over how and when you access your money to shape your income to your needs and lifestyle. You can take up to 25% of your transfer value tax-free. You need to be aware that as with any investments, the value can go up and down depending on how your investments perform. So, you need to feel able to deal with seeing your investments potentially reduce in value. Of course, they can also increase in value over time.
       
    • Use your savings to secure a regular income for life.
      You have the option to take a tax-free cash sum and buy a guaranteed, regular income for life with an insurance company (also called an annuity). This would give you the same security as taking your pension from the Plan, but you could find that you can buy a higher pension with your transfer value if you don’t need a spouse’s pension, or if you are a smoker or you are unwell. There are many things that would affect this including how much it costs to buy a pension when you come to do so. An impartial financial adviser could help you explore annuities to suit your circumstances.
       
    • Keep your transfer value invested until you are ready to use it. 
      Suitable if you do not need your pension income yet, so maybe you are carrying on working or you have other savings and investments you will be living on. You need to be aware that as with any investments, the value of your pension savings can go up and down depending on how your investments perform. So, you need to feel able to deal with seeing your investments potentially reduce in value. Of course, they can also increase in value over time.
       
    • Take all of your savings as a cash lump sum.
      You may wish to consider this if you have a small pension pot (under £30,000) as the regular income it could provide would be quite low. The first 25% would be paid tax-free. This could also be relevant if your pension pot is over £30,000, but you would have to pay tax at a higher marginal rate.
       
    • You can also do a mix of these options.
      For example, keep your money invested for a while, take up to 25% tax-free and then later withdraw lump sums as you need them, or buy a pension to last you the rest of your life.   
  • Choosing this option

    You can contact Mercer directly and request a quote to be sent to you if you would like to see how much your transfer value is.

    If you choose not to do anything between now and when you are due to retire, Mercer will write to you with your retirement statement six months before your normal pension age.

     

  • Is it right for me?

    In the end, only you can know if transferring out would be right for you. It will depend on a number of things, but it really comes down to your personal circumstances, your need for flexibility and your appetite for risk.

    You should bear in mind that transferring out of the Plan means:

    • You will not receive any other benefits from the Plan.
    • You will need to manage how much of your money you use and where it is invested so you do not run out.
    • It will be up to you to decide how to invest your transfer value.
    • Your transfer value could go up and down in value once invested and that risk lies with you. This is different from the Plan where the Company and Trustee takes on this risk.
    • You will need to be mindful of tax, as any lump sums you take over and above your tax-free allowance will be added to your income for tax purposes.

    There are a number of options available to you to help you design the income you want when you come to take your benefits. Speaking to a financial adviser is always a good idea when it comes to weighing up all these options and making a decision that’s right for you.

  • Taking financial advice

    If you would like to transfer out of the Plan and your transfer value is £30,000 or over, the Trustee can only agree to transfer your benefits to a new arrangement if you have taken advice from a qualified financial adviser.

    Not only will an adviser help you think through what you need from your income in retirement, but they will explain what you can do with your money in more detail.  Find out more here.

Important:

If your transfer value is £30,000 or more, you must take advice from a financial adviser before making your decision.

You can find out more about financial advice here.