The standard pension scheme is a Defined Benefits pension, however there also exists the option of transferring to a personal pension. The main reasons why you may want to transfer to a personal pension are:
- Flexibility – More choice in how you can distribute your pension income over time
- Tax-free cash - With a Personal Pension you can get up to 25% of your pension fund as tax-free cash. In a DB pension you may find that 25% takes a larger portion away from your pension income
- Inheritance – Unlike a final salary pension, up to 100% of money in a Personal Pension pot can be passed onto beneficiaries.
- Health – Final Salary pensions benefit those who are expecting to live for a long time. With a shorter life expectancy, you may want to have access to more of your pension quicker where you have greater control and more flexibility
You may want more money initially to travel and experience a more luxurious life whilst you are fit able, then live a more minimalist lifestyle when you are older.
This unequal distribution of payments is not possible with a Defined Benefit Pension scheme, however transferring out will give you the flexibility to do this.