You are here: cherry > Press releases for July 2014 > TIDEWAY WELCOMES GOVERNMENT ANNOUNCEMENT ON PRIVATE SECTOR DEFINED BENEFIT FINAL SALARY TRANSFERS

22 July 2014

PENSIONS PLANNING AND RETIREMENT SPECIALIST Tideway has applauded the Government’s decision to continue allow people in company defined benefit pensions to transfer out of their scheme.

These workers will from April 2015 be able to enjoy the same unrestricted access being afforded to defined contribution savers from April 2015 under its landmark reforms.

“With gilt yields at record lows the cost of guaranteeing investment returns in annuities are high – likewise the transfer values of defined benefits,” said Tideway’s James Baxter.

“In our view, combining such high transfer values with the ability to use completely flexible drawdown facilities and trade cash and income in the early years of retirement at the expense of income in the pensioner’s 80’s and 90’s will make a good deal of sense for many,” added Baxter.

“The ability to control a large capital sum, create tax efficiencies through accelerated withdrawals reinvested into ISAs and ultimately to pass on a valuable asset to the next generation will all be contributing factors to the decision to transfer,” he said.

“There will be many employees who will prefer the guarantees of increasing income and income for life which come with defined benefit schemes, but for many others the choices created by a transfer will be compelling.”

“Drawdown has been historically perceived as the high risk option, but this will change and there is going to be a whole new group of pensioners using drawdown who want to avoid the costs and inflexibility of an annuity but don’t want high risk equity based investments. Investment solutions generating secure income will be in increasing demand,” predicted Baxter

James Baxter

Managing Partner Tideway Investment Partners

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ENDS