Savers who cash in their generous final salary pensions could face poverty in their golden years unless they take good financial advice, warns Foster Denovo

Each year some savers approaching retirement are choosing to give up a guaranteed income for life in exchange for an enticing eye-watering cash lump sum.
Funds transferred out of defined benefit pension schemes almost tripled last year, according to the Office for National Statistics.
For many savers, trading the security of a so-called defined benefit pension is inappropriate, so speaking to a good financial adviser to properly discuss the decision is vital, says Jamie Smith, Partner at Foster Denovo.
Before diving in, holders should note that once a transfer is made, it cannot be reversed. So if you make the wrong decision, the consequences can be disastrous.
If your pot is worth more than £30,000 you are required by law to seek financial advice – but it’s important to choose the right adviser.
Smith said: “While it is a legal requirement to take advice if your final salary transfer is worth more than £30,000, it doesn’t mean that it is the right decision for you.
“The search for the right financial adviser is not just about looking for someone with the correct qualifications – you need to work with someone who is highly experienced in this area.
“You need someone who will ask you questions about your aims, circumstances and ambitions to get the right outcome for you.”
So what else should savers consider when receiving advice for a pension transfer?
Smith, a Partner at Foster Denovo, has set out a list of important things to consider when getting advice.
• Make sure the adviser starts from the assumption that a transfer is unsuitable for you. The vast majority of people are far better off sticking with their final salary pensions.
• Your financial adviser should take the time to understand you and your circumstances. This includes reviewing all of your income sources, your debts and any investments you have. But it should also include what provisions you have in place when you die. If your adviser doesn’t do this, walk away and find someone else.
• You could be retired for a very long time, so having enough cash for your later years is vital. Your advice should look at how you will be able to fund your retirement in detail and create cash flow models showing various different scenarios. These will show where you are now, financially, but more importantly how healthy your finances are likely to be in the future.
• Is the advice your adviser gives you signed off by anyone else? Most good firms will have at least one other adviser, and in most cases a committee, checking that you have received the right advice. This is important because, remember, you can’t go back.
• Ask what percentage of transfers they have completed in comparison to those that have not gone ahead. If your adviser is transferring in most cases it should set off alarm bells.
Smith said: “Because the income from a final salary pension scheme is guaranteed for life, you need to be certain that transferring your benefits out of your scheme is the right thing for you, as the transfer cannot be reversed. If you’re not certain about transferring, it may be best to keep your benefits where they are.”