Around six million defined benefit pension members have yet to consider transferring to a more flexible pension scheme, suggesting the current volume of transfers in the market is just the “tip of the iceberg”, according to HUB Group.
The FCA’s Financial Lives survey found nearly nine in 10 (89%) of deferred and active members of DB schemes are yet to consider transferring. Of the 11% of DB members who have considered a transfer, only about three in 10 (28%) are expecting to go ahead, while 21% were unsure.
HUB Pension Consulting said the figures suggest there will be an increasing number of pension scheme members likely to consider a transfer before they start accessing their benefits. With around 7.1 million active or deferred private sector DB pension holders in the UK, this could equate to some six million people going on to consider a transfer.
Simon Gray, director, HUB Pension Consulting, said: “Transferring has its attractions in terms of giving flexible access to cash so it is likely to be considered by most private sector DB pension savers at some point before they lock into their fixed income at retirement. But it is only suitable to transfer in specific circumstances which is why advice is so important.
“Regulation has tightened in this area because of FCA concerns over whether previous advice given to members has always been in the best interests of those members. Our view is that rather than expecting the member to go out and find their own adviser, trustees can help members receive good outcomes by partnering with an adviser they have vetted and trust to provide the high quality of support needed.”
HUB said it had seen rising demand from trustees for a panel of advisers that are available on demand and able to provide an “always on” service for scheme members as needed.
