Defined Benefit  

Regulator reveals scale of defined benefit transfers

Regulator reveals scale of defined benefit transfers

The Pensions Regulator has revealed that 67,700  people transferred out of defined benefit pension schemes in the last year alone, as savers seek to take advantage of sky-high transfer values.

But TPR estimates the number could be as high as 80,000 as not every scheme reported how many transfers they carried out.

The figures are according to a Freedom of Information request published on TPR's website, for the period of 1 April 2016 to 31 March 2017.

No information was available for previous years, but David Penney, director and chartered financial planner, at Penney, Rudd & Winter said he is "very concerned" about the significant rise in the number of transfers since the pension rules were changed in April 2015 giving people more freedom to access their retirement savings.

"I do not think we need more regulation, as the regulations are clear. Perhaps there could be a clampdown on contingent charging, as that creates a clear conflict of interest," he said.

"Most important is for advisers to try and calm the flurry of interest from deferred members, stirred up by the press and pension providers.

"There are similarities to the Securities and Investment Board pension review of the early 1990s, and that worries me. The pension freedoms and higher transfer values do not, in my view, justify the number of transfers that are being completed."

Around 11 million people have built up benefits in private sector DB pensions and sky high transfer values are increasingly tempting people to leave so called "gold-plated" final salary schemes.

Since April 2015 and the introduction of pension freedoms, anyone over the age of 55 has been able to access their DB pension by first transferring it to a defined contribution pension scheme.

Anyone seeking a transfer over £30,000 must seek independent advice and the trustees of the ceding DB scheme must ascertain that this has been done.