Operated by Tameside Metropolitan Borough Council, the Greater Manchester Pension Fund is a defined benefit pension scheme available (or previously available) to many employees of GM based institutions, including the 10 local council authorities, and a few extras such as MMU and the University of Bolton.
Depending on when scheme members joined the Greater Manchester Pension Fund, their pension may be a Final Salary Pension, or a Career Average pension – both of which are types of Defined Benefit Schemes, considered to be both rare and valuable.
These days, the rules mean that people can often leave their pension fund, and take a cash amount to be placed into a private pension.
The potential benefits of this are often sung by unregulated marketing firms offering ‘free pension reviews’, and financial advisers looking to earn some big transfer fees by recommending a move.
But in reality, transfers away from defined benefit pension schemes like the Greater Manchester Pension Fund are rarely found to be suitable and in the individuals best interests.
A transfer away from a final salary pension into a private scheme is often a much bigger risk than people realise. While the money remains in the scheme, the trustees are honour-bound to keep their promise: a guaranteed income in retirement, based on the salaries you’ve earned.
All the risk and responsibility falls on the shoulders of those trustees and employers to make sure the money is there. Even if things go wrong, final salary pension schemes are backed up to 90% of their value by the Pension Protection Fund (PFF), making them some of the safest pensions you can hope for. They often come with great death-in-service benefits too, and they don’t cost scheme members to run.
But many people are told they could be able to get more in retirement if they transfer to a private scheme and invest it themselves.
Technically, this is true – they may be able to do that.
But only by exposing what was a safe-bet to a lot more risk. In some cases, this risk becomes real and people lose hundreds of thousands from their pension.
More than that, they will likely lose death in service benefits, too.
While there are some situations that may make a final salary pension transfer suitable, these are quite rare, and many people receive negligent advice that helps facilitate the transfer.
If you’ve transferred away from the Greater Manchester Pension Fund, then you may have lost money in the long run, may have been mis-sold, and may be able to make a claim.
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