Barclays has paid £4.2bn in pension transfers out of its defined benefit (DB) scheme during 2017, according to the bank’s annual report.
This value has quadrupled in a year, since transfers from the Barclays Bank UK Retirement fund (UKRF) stood at £1bn in 2016.
This increase in transfers has benefited the scheme accounts – the pension fund ended 2017 with a surplus of £952m according to IAS 19 accounting measures. In the previous year, it had a deficit of £27m.
According to Henry Tapper, pensions expert and founder of Pension Playpen, the bank's balance sheet will have seen a marked improvement from all these people leaving the scheme, since "transfers are calculated on a best estimate basis and the liabilities are accounted for by the bank at mark to market".
He argued that it is time for a proper audit to be done on the accounts not just of Barclays, but of all the large defined benefit occupational pensions in the private sector.
He said: "If we can't measure the extent of transfers, we can't work out if we have a problem."
The volume of defined benefit transfers has been soaring, as savers seek to take advantage of sky-high transfer values and to move their nest eggs into defined contribution (DC) schemes in order to access their cash using pension freedoms.
HM Revenue & Customs data showed more than £14bn has been unlocked from defined contribution pensions since pension freedoms came into effect.
The rush to cash out pension savings is expected to continue, since according to estimates from Hymans Robertson, around one million individuals will transfer out of their defined benefit pension schemes in the next 25 years.
Barclays has decided to move its defined benefit scheme to the investment banking business after 2025, due to new ring-fencing rules.
According to new regulations brought in to strengthen the financial system following the financial crisis, banks will need to ring-fence their retail business, separating it from riskier activities, such as investment banking.
Barclays will satisfy this requirement by setting up a new ring-fenced bank, subject to approval, in April 2018.
Due to concerns about the future of pension fund members pensions, Frank Field, chairman of the Work and Pensions select committee, has written to The Pensions Regulator (TPR) and the scheme trustees.
maria.espadinha@ft.com
