The head of employer advisory services for pensions firm Spence & Partners said he welcomed February’s review on annuities from the FCA, which found that 80 per cent of consumers buying an annuity from their existing providers could get a better deal in the open market.
However, he said DB members should also have this option. Mr Collins said: “There is too often a presumption that the DB is best, when the reality is that many members could get a better deal by taking their money elsewhere, in particular by seeking out enhanced annuities or securing an income that better suits their own needs.”
He added that trustees of schemes and sponsoring employers should offer members access to financial advice at retirement.
Tom Binstead, director of employee benefits at Cheltenham-based Bank House Corporate, said: “The idea of going from a DB scheme to annuities is very unlikely to be financially beneficial. DB schemes are very different from DC schemes.”
However, he said he would be “cautious” of suggesting that people should shop around for a DB scheme. “It’s a complex subject,” he said. “The right advice should always be sought and people should have options with DB at the time. Income drawdown might be an option but people can do that anywhere by taking a transfer.”