Based on data compiled by our mutual associates, Mercer, deficits in traditional company pension plans rose by 20% in Ireland last year (Independent Ie, 2019). Simultaneously, the number of people transferring their final salary pension scheme has risen by 25% over the past year (Royal London, 2018).
The forecasted corporate deficit in Ireland has grown from €1.3bn in 2017 to €1.6bn at the end of 2018, largely due to poor equity market performance in Q4-18. At the same, despite DB (Defined Benefit) schemes promising a guaranteed and usually inflation proofed income in retirement, which is based on years of service and final salary; more and more people are transferring their DB pension towards a DC (Defined Contribution) scheme. Why is this?
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So in summary, the key advantages which a DC pension may hold over a DB scheme include the potential for more flexibility in terms of access to income, greater lump sums, and flexibility for succession planning. You should note, however. there are risks involved with a transfer.
So while more and more people are transferring out of their traditional salary-related pensions for the reasons outlined above, whether this is a good idea or not for you depends entirely on your personal situation. For some, a guaranteed salary-based pension that lasts a lifetime and is unaffected by market uncertainty might be the optimum solution. Therefore before you make the decision to transfer you should be aware of the top reasons to ‘stick’ to a DB scheme, as outlined below, and discuss your individual circumstances with a qualified advisor.
In order to understand whether to ‘Twist or Stick’ with your pension, you should speak to a financial advisor who can offer you a bespoke and data-driven assessment. As most likely the best option for you and your finances will depend entirely on how you wish to spend your retirement. To take control of your retirement and speak to a local financial advisor today by registering your details above or contacting us at email@example.com. Our dual-qualified advisors (in Ireland AND the UK) - who specialise in retirement planning for clients with pensions in more than one country - are uniquely qualified and experienced to help you optimise your financial future.
- Press Releases, Royal London, May-2018
Copyright 2019 by Imperius.
Issued by Imperius Asset Management Limited, which is authorised and regulated by the Central Bank of Ireland. Registered address 37 Main Street, Ongar, Dublin, 15, Ireland. No. 460677.