OCTOBER 2020
EDITION

VIEW ONLINE
SUBSCRIBE

Register with PP

Newsletter, Jobs & Event Alerts

Latest

Pension member education key to better pension transfers process

20 May 2019

With as many as 70,000 defined benefit members exercising their pension freedoms every year, greater support and education around transfers is needed, XPS Pensions Group has said.

According to the results of XPS’ latest member outcomes survey, nearly a third (30%) of its clients are actively exploring partial transfers.

Wayne Segers, principle, XPS Pensions Group, said: “With so many leaving DB schemes, there is no time to wait on providing clear robust support to help members understand the consequences of their options. New FCA guidelines are driving better support from advisers but trustees and employers have a vital role to play in initial education.”

The group added that following its 2018 survey, clients had started to take more action, with 40% implementing or considering implementing a communications strategy and  a quarter of respondents looking at introducing a low-cost receiving vehicle for members. One in 10 said they now have an adviser in place at retirement, with a further 25% considering using one.

According to its survey, the average transfer value rose over 15% to £275,000 from the previous year’s £235,000, with 99% of members moving to a self-invested personal pension (SIPP).

Segers added: “A one size fits all destination is unlikely to drive the best outcomes for all members. Some members may be paying for features they don’t need or use. Charges can have a devastating effect on member’s retirement incomes. Lower cost, simpler SIPPs and master trusts can help and members deserve better support to easily access these.”

The survey also explored the impact charges can have on member outcomes, with those members opting for more expensive vehicles over lower-cost alternatives potentially running out of money seven years earlier if 25% tax free cash is taken and they draw an annual income of £12,000. In addition, they could receive £3,200 less each year of retirement income over their expected lifetime and leave £400,000 less inheritance, up from £340,000 reported in 2018.

Do NOT follow this link or you will be banned from the site!