The Actuarial Profession expresses concern about commutation of pensions

Fri, 16 Feb 2007

The Actuarial Profession has written to the Department for Work and Pensions to call for better advice to people who are considering swapping part of their pension for a lump sum.

Cash commutation involves pension scheme members agreeing to give up part of their pension in order to receive a cash sum up front, which they may then reinvest in buy-to-let mortgages or other investments.

However, the organisation has warned that some people may not be receiving appropriate support before making their decision.

As a result, it has suggested some people may benefit from taking independent financial advice before deciding on a course of action.

Gordon Sharp, chairman of the Actuarial Profession's pensions board, remarked: "Pension scheme benefits have become very valuable.

"We need to make sure people are getting the appropriate advice to help them make these important decisions at a key point in their lives."

Often, people use private company pension schemes to supplement their income from a basic state pension.

Typically, an employee and an employer contribute to a private pension plan simultaneously.

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