Pension Transfer Values at Record High
The number of and value of pensions being transferred out of defined benefit (DB) schemes is greater than ever research from Royal London has found. A recent survey of 800 UK financial advisers found that the most DB transfers are valued between £250,000 and £500,000 ($639,405, €570,998). This follows findings from Old Mutual International that fears that DB schemes may be unable to meet their long-term liabilities is driving demand. Furthermore the amount being offered in transfer value is significantly higher at the moment than it has been in the past.
The vast majority of clients transferring are in their 50s, and the typical cash sum offered is between 25 and 30 times the value of the annual pension given up.
When asked the main reasons why people who have received advice want to go ahead with the transfer, the following were the top five reasons:
The ability to provide more flexible income in retirement: 83%
Large current transfer values: 78%
Inheritance considerations: 69%
Access to greater tax-free cash: 57%
To take benefits earlier than in the DB scheme: 44%
Commenting on the findings, Royal London director of policy Steve Webb said: “It is clear that large and growing numbers of people are choosing to exchange the promise of a regular pension in retirement for a large cash lump sum. There is no doubt that the ability to transfer a Defined Benefit pension into a more flexible format is very attractive, provided that the decision to transfer is based on good quality independent advice.
If you have a defined benefit scheme in the UK and would like to find out what your current transfer value is kindly contact us at info@loadstonegroup.com (subject line will automatically be generated) or alternatively visit the Overseas Pensions page on our site.
