David* was in his early 50’s and came to us with a question about a small defined benefits pension pot he had.

Under the scheme, if he were to die, David’s wife would only receive a spouse’s pension of just £750 per annum. This had only recently come to his attention and he was understandably concerned about the family history of heart failure. David had sadly lost his father at an early age and he was worried that, in the event that the same should happen to him, his family, including his two teenage sons, would be left with very little.

Financial planning is at least partially about providing peace of mind. David had happily recently received the ‘all clear’ on the health front, but wanted the same financially too!

We quickly established that the transfer value in lieu of his benefits under the scheme was £50,000. This meant that if David transferred away from the scheme and were to die before age 75, his beneficiaries would inherit the entire £50,000, either as a tax free lump sum or as tax free income on his death. This transfer value would therefore benefit his wife and family upon his death and go some way to supporting them financially.

Clearly the best option for David was to take advantage of the transfer value and transfer away from the scheme. We worked with the pension scheme trustees, together with the receiving scheme and completed the whole transfer process within ten days.

David was delighted with the outcome, saying it had given him peace of mind (there’s that phrase again!) knowing that on his death, his wife and family would have access to a lump sum of money, rather than his wife receiving only a very small income.

* Not real name

Please note: This recommendation was due to the client’s specific circumstances and the default position would not be to transfer.