You are here: Home - Retirement - Retirement planning - News -

Significant fall in people transferring out of Defined Benefit pensions

Written by:
The number of people transferring out of Defined Benefit pension schemes has significantly fallen, according to data released by the City watchdog.

Of 87,491 people to receive advice on Defined Benefit (DB) pension transfers between October 2018 and March 2020, nearly 50,000 (57%) were recommended to make the move.

However, 38,000 (43%) were recommended not to transfer or convert their DB pension.

The regulator, the Financial Conduct Authority (FCA) said this indicates that “firms are starting to act more in line with our expectation and messages that for DB advice, in most cases, a transfer is not in the client’s best interest”.

By comparison, the conversion rate – people transferring out – peaked at 72% in 2017, before falling to 69% between April 2015 and September 2018, down to 57% in the latest data set.

It also revealed that of those clients advised not to transfer, 2,936 (8%) insisted on the move.

The FCA also found a big drop in the number of firms authorised to give DB transfer advice – from 3,042 in October 2018 to just 1,965 in July 2020.

In total, firms advised on a total value of £30.3bn between October 2018 and March 2020. This is made up of £20.1bn in recommendations ‘to transfer’ and £10.2bn in recommendations ‘not to transfer’.

Steve Webb, partner at LCP said: “It is a welcome trend that historically high rates of recommendations to transfer out of Defined Benefit pension schemes are now on the decrease. But the DB transfer market remains a source of real concern. The supply of advisers has fallen dramatically in recent years, and recent regulatory changes plus the cost of obtaining insurance is likely to reinforce this trend.

“Members are likely to find it increasingly difficult to source high quality impartial advice if left to their own devices. This data reinforces the case for pension schemes to appoint one or more high quality advice firms to help members make good choices about pension transfers.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Santander, Lloyds and TSB ‘have the most unreliable online banking’

The three high street banks were identified as having the least reliable online services after an analysis of...
Santander, Lloyds and TSB 'have the most unreliable online banking'

130 million old £1 coins still out there: what to do if you have one

An estimated 131 million old round £1 coins have yet to be returned to the Royal Mint, nearly three years afte...
130 million old £1 coins still out there: what to do if you have one

How to a write a winning property offer letter

You’ve viewed the perfect property but there’s likely to be stiff competition from other buyers. Here are five...
How to a write a winning property offer letter

Ryanair jetting towards US flights for £10

Ryanair is on course to achieve its long-held ambition of offering transatlantic flights to the US – and the...

Investing in car parks: a good vehicle for income seekers?

As the search for income continues, many investors are turning to alternatives, with car parks becoming increa...

A quick guide to guarantor loans – in association with Guarantor Loan Comparison

Considering a guarantor loan or becoming a guarantor yourself? Read our essential guide...

Results round-up: Companies to watch this week

Mulberry and more will face the music this week.

Product launches of the week

Select Property Group, Schroders, Leeds Building Society and more have exciting news this week.

Money Tips of the Week