Pension savers have used their rights to transfer their ‘final salary’ pension in unprecedented numbers over the past three years, moving £60 billion out of defined benefit (DB) schemes since 2016.
According to a Freedom of Information (FoI) request, more than 200,000 pension transfers took place in 2018-19, doubling the 100,000 transfers from the year before. These moves were also worth two and a half times more than the value in 2017-18, totalling £34 billion. Meanwhile, in 2016-17, approximately 80,000 people accessed £12 billion worth of DB savings.
Although the 2018-19 figures were the highest of the three years assessed, The Pensions Regulator (TPR) expects the current total number of transfers to be much higher, as most of the 2018-19 data relates to transfers in the 12 months to 31 December 2017 or 31 March 2018.
Moreover, the figures sent out in the FoI are only estimates, as not all schemes, reporting that transfers took place, have reported exactly how many transfers they carried out or the value of the transfers.
The FoI request was submitted by former Pension Minister Sir Steve Webb, who said that the figures show the continuing “huge interest” in using pension freedoms to access pension pots.
He added that, while it remains the case that staying in a DB scheme will be the right answer for most people, there may be individual reasons why a different combination of pensions would give a better outcome.
As he pointed out, people should seek out impartial financial expert advice before they decide what to do with their pension.
Steve Horton, Financial Services Partner at Milsted Langdon, said: “Defined benefit transfers have increased significantly in recent years, with last year more than doubling the previous years’ total. It’s always prudent to seek advice before making any decision with your pension savings.
“For advice on financial planning, contact us today.”