Nearly one-in-three retirement savers would consider transferring final salary pension benefits to defined contribution schemes, latest research shows.
The survey – conducted in August by Consumer Intelligence on behalf of MetLife among 1,141 people aged over 40 – found 31% of those aged over 40 were tempted by the rising transfer values offered by defined benefit schemes.
However, the numbers tempted to transfer out falls among the over-55s – with just 26% of those aged over 55 saying they would consider transferring.
This comes as analysis by Xafinity has found transfer values for defined benefit schemes are now at a record high following the EU Referendum – with a model DB scheme offering a transfer value of £243,000 to a member aged 64 with a £10,000 annual pension at age 65.
CTC Software managing director and co-founder Nigel Chambers recently argued in Professional Adviser that transferring out of a defined benefit scheme, while a rarely considered option, can be a prudent course of action for many more people than is widely thought.
According to MetLife, savers are increasingly valuing flexibility over their pension savings, but warns that this is often at the expense of guaranteed income – and has launched a campaign with financial advisers to highlight the valuable role guarantees can play in retirement.
MetLife UK wealth management director Simon Massey said: “The record high for final salary transfer values is tempting savers to give up the security of a guaranteed income for non-guaranteed options, but there is a real risk that people will regret their decision.
“Guaranteed income is absolutely vital to ensure that people can have a comfortable standard of living in retirement and final salary schemes, along with other solutions such as guaranteed drawdown, provide that certainty.”
He added: “Anyone considering transferring out of a final salary scheme should take independent advice, which is why we are encouraging broader retirement conversations looking at the complete range of options savers have, including guarantees.”
MetLife’s research shows men are more likely to have defined benefit schemes than women – 55% of over-40s men have final salary schemes compared with 46% of women. And they are more likely to consider transferring cash as 32% of men said they would look into compared with 29% of women.
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