04 Aug 2017

Rising numbers transfer out of final-salary pension schemes

Rising numbers transfer out of final-salary pension schemes

There has been a surge in transfers out of final-salary pensions in the last year.

This emerged in a survey of more than 800 financial advisers undertaken by mutual insurer Royal London.

It found growth of more than 50% in the volume of transfers out of final-salary pensions, with the most common transfer value lying in the £250,000 to £500,000 range.

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.

" For some people, the value of their pension pot will be greater than the value of their house. This makes it all the more important that people think very carefully before making a transfer, and take full account of independent financial advice before making such an irrevocable decision."


The study found that 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 a defined benefit scheme: 44%

Advisers also reported the main reasons which they give for recommending against a transfer. The principal concerns were:

  • Concerns about losing the certain income from a defined benefit scheme: 81%
  • Investment risk associated with the transfer not appropriate to client: 65%
  • Transfer value represents poor value: 59%

Advisers also expressed frustration with the length of time it can take to obtain information from schemes in order to provide proper advice on transfers.

Independent financial advise

Aberdein Considine’s independent financial advisers - who are authorised and regulated by the Financial Conduct Authority (FCA) - can guide you through the pension maze and help you tailor a plan to your circumstances.

Click here to find out more.

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