One in five defined benefit pension schemes now includes a personalised transfer value figure in its retirement packs, as schemes have started to offer a more flexible service to their members, a survey by Aon has found.
According to the Aon 2019 Member Options Survey of more than 320 DB schemes, there is a clear trend of providing members with retirement support as 20 per cent are now making online tools and access to IFAs available, compared with a mere one in 10 schemes last year.
Aon said it expects this group to increase to almost one third of schemes in the next 12 to 18 months.
Ben Roe, senior partner and head of the member options team at Aon, said: "There was initially some debate around the level of support to offer DB members when transferring their benefits, but the trend we are seeing in the market is quite clear.
"An increasing number of schemes are moving towards offering members additional advice and the tools necessary to make well-informed decisions at retirement.
"It is surely better for trustees or sponsors to make this advice available to members, rather than leaving them to fend for themselves in finding a suitable IFA."
The survey also found that roughly one third of schemes offer additional options alongside the usual standard transfer value, pension, and tax-free lump sum.
For instance, a third of these provided members with a pension exchange option - the ability to convert some of their pension at retirement to a higher level of pension in return for lower future increases.
A further 24 per cent offered a partial transfer, which means members can move part of their DB pension and leave the rest in the scheme thus providing security and flexibility.
Mr Roe added: "Another key change is in the flexibility being offered to members within DB schemes, so that the freedoms available in DC schemes can be mirrored.
"Transferring out of a DB scheme can be seen as an ‘all or nothing’ decision but options such as partial transfers can be considered a middle ground between the security offered by a DB pension and the flexibility from transferring to the DC world.
"This is definitely one of the areas to watch in the coming year as the potential options gain awareness and popularity."
