A LEADING figure in personal finance locally has urged people to seek individual advice after a rush to leave final salary pension schemes.

Ex-pensions minister Baroness Altmann is among those who have spoken of leaving a defined benefit scheme after values quoted for “transferring out” rose.

Allan Cruse, immediate past president of the Chartered Insurance Institute for Bournemouth, said: “The two main driving forces behind the surge in people giving up their ‘gold-plated’ pensions are the introduction of ‘pension freedoms’ two years ago, but more the spike in the amounts being offered by the schemes to leave.

“After the EU vote, the Bank of England quickly reduced interest rates and talked down the prospects of UK growth, leading investors to bet that interest rates would be lower, for longer.

“This led to the values schemes offered to let members leave shooting up.”

Defined benefit schemes are based either on a worker’s final salary or on their career average earnings. They offer the attractive promise of a guaranteed income for life, but many have been closed to new contributions in recent decades as employers tried to cap their liabilities.

Defined contribution schemes see workers saving into a pension pot which can be used to buy a retirement income. Although they offer attractive security, they lack the flexibility to accommodate early retirement, or for the pensioner to spend more in the early years of retirement when they are more active.

But workers transferring out run the risk of getting less and their future income relies upon the performance of investments.

Staying in is usually low risk, although employers can go bust without enough money to pay the promised pensions. In those circumstances, the Pension Protection Fund may provide compensation, but it might not be the full amount expected.

Mr Cruse, who is partner with Strategic Solutions Financial Services, said: “At current super-low interest rates, the transfer value of most defined benefit pensions has increased massively. For many, it seems sensible to take a look at their situation. I have done so myself and transferred my pension as a result, as has my wife.

“Could that be the wrong decision? Yes it certainly could, but I appreciate I am in the lucky position where I am aware of all the advantages and disadvantages and for me and my family, moving our pensions was the most attractive option.

“But that is based on us and our situation, it is important to take individual advice. Just because your friends are making one decision, or your work colleagues or your mate ‘down the pub’ is doing something doesn’t matter; quality individual advice is the key in every situation, no two people are ever the same and it is imperative that both the individuals themselves and their independent financial advisers work closely to ensure the best outcome is achieved.”