The number of savers transferring out of defined benefit (DB) schemes in the 2017/18 financial year could be as high as 100,000, according to figures published by industry watchdog The Pensions Regulator (TPR).
DB scheme members can make a request to transfer their pension out of the scheme and into another savings arrangement. This is often, but not always, a defined contribution (DC) pension scheme. By moving funds into a DC scheme, individuals can then choose to withdraw pension savings as cash, use a drawdown product or buy an annuity. Those options are not available in a DB scheme, which instead provides regular payments throughout retirement based on earnings during employment.
Between 1 April and 31 March 2018, DB schemes reported 72,700 transfers out, totalling £14.3 billion. But as not all schemes report how many transfers they have carried out, TPR estimates the actual number could be as high as 100,000.
Deciding to transfer money out of a DB scheme and into another pension or other arrangement is a major decision and requires careful consideration. DB schemes can have the advantage of a regular income throughout the whole of retirement, whereas DC schemes can offer individuals more flexibility on how they spend their savings.
Anyone considering a move of this type must seek financial advice as it is very important the risks are explained and fully understood.
Equally important is understanding how all the different pensions that you’ve accumulated during your working life will work together to provide you with an income in retirement.
At Brunsdon we are experienced in all aspects of retirement planning, including DB transfers, so please speak to your Brunsdon Financial Adviser if you would like to discuss your current or future pension arrangements.
Please note that this information is for guidance only and does not constitute personal advice. Brunsdon is not responsible for the content of external web sites.