British Airways pension advice

Why now is a good time to consider transferring your BA Pension (NAPS)

With British Airways closing their Defined Benefit pension scheme  – the New Airways Pension Scheme (NAPS) – on 31st March 2018, many members will be considering how this affects their own pension & retirement plans.

Throughout April and May 2018, BA will be sending out a Cash Equivalent Transfer Value to members. With cases that we have seen so far, we expect that many will be considering the benefits of a pension transfer to take advantage of attractive transfer values.

And so, as a helpful guide, below we outline some of the key benefits, risks and considerations for those that are considering a possible pension transfer.

Since the UK government introduced rule changes in 2015, it has been reported that more than 210,000 people have transferred out of their Defined Benefit pension – with an estimated value of around £50bn.
Record transfer values have contributed to a large increase in number of people looking to transfer their defined benefit pension; with some schemes offering 33-40 times what the annual retirement income would have been.

But what does this mean for you? Should you transfer your BA pension? What is your pension worth? And what are the risks and benefits to transferring out of your NAPS scheme?

What are the benefits in transferring out of my BA Defined Benefit Scheme? 

Some of the key benefits include:

  • High Transfer Values at present: Transfer values have increased markedly due to falling bond yields. In many cases, the values offered are thirty-to-forty times the annual pension the member is entitled to.
  • Flexibility in how you can take benefits from your pension: ‘Pension freedoms’ introduced in 2015 have given a lot more flexibility around when and how benefits may be taken from pensions. Gives the ability to take higher income early in retirement; or perhaps the ability to take tax-free cash from the fund while still working to meet other financial aspirations
  • Better Legacy/ ‘Death Benefits’: transferring gives greater ability to pass pension funds down to the next generation.
  • Tax Efficiency: more income flexibility allows more capacity for tax planning

Why are others transferring? 

There are many reasons for the upsurge in transfers out of defined benefit schemes generally, including the benefits listed above.
Introduction of pension freedoms in 2015 has allowed greater flexibility and control over when and how benefits may be taken (following transfer to a defined contribution alternative). And, to a certain extent, it grants greater control over income tax in retirement.

For many clients, we have found a key driver for ultimately deciding to transfer has been the ability to cascade pension assets down to the next generation, carving out the ability to leave a – usually tax-efficient – legacy.

What is my pension likely to be worth? 

Transfer values change scheme to scheme and are affected by interest rates and gilt yields. However, based on recent cases, you may be offered a Transfer Value for your NAPS pension of between 26-30 times what the annual retirement income is due to be. A few examples:

  • Example 1: If the annual pension you expect in retirement is around £12,000, then you may expect a Cash Equivalent Transfer Value in the region of around £312,000 – £350,000.
  • Example 2: If the annual pension you expect in retirement is around £25,000, then you may expect a Cash Equivalent Transfer Value in the region of around £650,000 – £750,000.

Should you transfer? 

Simply put, everyone’s circumstances are different. While there are many attractive benefits, there are of course risks and considerations.

Any pension transfer needs to fully thought through – effectively you would forego relative certainty of income in retirement for at least some level of investment risk.

Transferring a pension is certainly not for everyone and the advice can often be to remain within the security of the scheme. Thankfully getting advice is not as difficult or as daunting as you may think.

Who do Glasgow Wealth advise?

At Glasgow Wealth, as Independent Financial Advisers, we specialise in Pension Advice & Retirement Planning; Investment Management; Inheritance Tax & Estate Planning.
Based in Glasgow but serving clients throughout Scotland and the UK – Aberdeen, Glasgow, Edinburgh, London.

Many deferred members of Defined Benefit schemes are considering a transfer out of the scheme. Helped by recent high transfer values, there can be a compelling case for transfer. However transferring out of a Defined Benefit/ Final Salary Scheme is not for everyone – which reinforces the need for robust and independent financial advice.

For more information:

-> Pension Advice & Retirement Planning 

-> How much is your Pension Worth? – Pension Calculator 

-> Final Salary Pension Transfers – are they worth the risk? 

-> For those looking for more information on the options relating to the new BA Select scheme, BA have made some resources available on the website (