More than £60bn transferred out of ‘gold plated’ pensions
More than £60 billion has been transferred out of “gold plated” pension schemes in the past three years, research suggests.
Some 390,000 transfers from defined benefit (DB) schemes are calculated by Royal London to have been made since 2016.
DB schemes, such as final salary or career average pensions, are often described as “gold plated” as they promise people a certain level of income in retirement.
Unlike defined contribution (DC) schemes they do not come under the pension freedoms, which give over-55s more flexibility over how they use their retirement pot.
However, while DB schemes promise savers a certain level of income, DC schemes put the risk of how much money someone will end up with in retirement on to the saver, based on factors such as investment performance.
In June, the Financial Conduct Authority (FCA) said too much pension transfer advice was not of an acceptable standard.
The FCA has emphasised that, when advising on DB transfers, advisers should start from the position that a transfer is not suitable.
Royal London made the calculations from freedom of information (FOI) data from the Pensions Regulator and estimated the value of pension transfers for 2016/17 based on the figures for subsequent years.
It said the figures may include a limited number of transfers from one DB scheme to another, rather than DB to DC transfers.
Sir Steve Webb, director of policy at Royal London, said: “These figures show the continuing huge interest in using pension freedoms to access pension rights in a more flexible way.
“Although the volume of transfers has probably passed its peak, large numbers of people are still interested in seeing whether reshaping their pension benefits would be in their interests.
“It remains the case that staying in a DB scheme will be the right answer for most people, but there may be individual reasons why a different combination of pensions would give a better outcome.
“In such cases it is vital that there continues to be a supply of impartial and expert financial advice for those considering making such a big decision.”