Companies offering big money to buy out final salary pensions

Published:  11 Aug at 6 PM
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Soon-to-be-retirees with final salary pensions could be in line for huge windfalls as companies attempt damage limitation measures.

Expats and other employees worried about their final salary pensions are about to be thrown a tempting lifeline in the form of company buy-outs for their gold-plated schemes. The golden goodbyes are already being offered by a number of companies eager to get rid of retirement savers.

The high sums on offer are being seen by employers as the only way to reduce the ever increasing liabilities caused by the popular schemes. Right now, the pension liability black holes within FTSE 350 companies are reported to be increasing at around £2 billion every day, with the excessive amounts being offered seen as making up the difference between projected QROPs pension payouts and those from guaranteed pensions.

For senior level workers, final salary pensions calculated on average earnings and length of service can add up to large amounts, even without other benefits such as guaranteed annuity rates. It’s no surprise that employers are offering employees tempting financial rewards for letting them off the hook.

These golden handshakes, when accepted by retirees, go into one of two direct contribution pensions, either offshore QROPs or onshore SIPPs. QROPs offer tax and financial advantages for pension savers and are especially useful for retirees planning to move overseas, but potential investors should take qualified, SEC registered financial advice in order to avoid being scammed.

Checking the FCA’s list for qualifiying QROPs is the best idea, even when qualified financial advice is being given. Over 40 offshore financial centres offer the pensions, with the Isle of Man, Gibraltar and Malta popular with UK retirees. Benefits can be paid in a number of major world currencies, and cash lumps sums of up to 30 per cent of the full value can be taken tax-free.
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