A new report has found that 45 per cent of defined benefit (DB) members approaching retirement do not feel properly informed enough to transfer their pension.
In a survey conducted by insurance provider LV= a total of 1,004 adults over the age of 55 with a DB pension were questioned. 29 per cent responded that they would not seek advice about transferring their pot to a defined contribution (DC) fund.
However, the majority of respondents (52 per cent) said they would take advice if their employer covered some of the cost, while 74 per cent said they would if employers covered all the cost.
The estimated DB to DC transfer value climbed considerably over 2016, with a 17 per cent growth between October 2015 and September 2016, making a transfer an attractive option to members approaching retirement.
Steve Lewis, head of distribution for retirement solutions at LV= said: “The pensions’ landscape has changed dramatically following the Freedom and Choice reforms and DB transfers are becoming increasingly popular,” he said. “We believe that advice is crucial to help consumers get the best outcomes but each week thousands of people are retiring without support.”
Around seven out of 10 respondents believed it should be their employer’s job to provide information about retirement options; while half said employers should provide guidance on how to use savings.
“Trustees have a key role to play in providing transparent information to scheme members about their options but we know that many DB members don’t currently feel they have enough knowledge,” Lewis continued.
“Most people are frightened of pensions, and have little idea of the options available to them. If members feel ill-informed, this could leave trustees exposed to litigation in future.”
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