Why choose a final salary pension?
For employees
- Their pension is not affected by falling investment returns or inflation.
- The only unknown is what their final salary will be.
- They get tax relief on their contributions.
For you
- On the downside, you usually have to make a big financial commitment, as you have to make sure the scheme can pay out the pensions despite having no control over inflation or interest rates.
- However, you do get tax relief on pension contributions.
- Final Salary schemes must pay levies to the Pension Protection Fund. In return there is a degree of protection for the members benefits should the sponsoring employer become insolvent.
- In addition, as final salary schemes are very appealing to employees, they can be good for attracting and keeping staff.
AEGON Trustee Solutions and final salary
With investment returns being lower than they used to be and people living longer in retirement, very few employers now set up final salary schemes and very few pension providers now offer them. This means that it is becoming harder to find the specialist knowledge needed to manage these types of scheme.
However, we at AEGON Trustee Solutions have many years of experience and expertise in this market, both in setting up new schemes and taking over existing schemes.
