The number defined benefit pension scheme transfers has risen by a staggering 567 per cent, since the introduction of pension freedoms.
According to the Financial Conduct Authority, in the six months to March 2016 a total of 5,056 people transferred from DB to a defined contribution pension scheme. In the six months to March this year, this figures had risen to 34,738.
There has been a steady increase in the number of people switching out of DB schemes since the introduction of pension freedom rules in April 2016.
From April to September 2016 there were 6,150 transfers, rising to 13,024 transfers between October and March 2016, and then 23,806 transfers between April and September 2017.
These figures were released by the FCA in response to a freedom of information request.
However the FCA pointed out that the number of firms providing this data has also increased over time, and this may explain part of this rise. This data was collected from the FCA’s Retirement Income Data Request, which covers both contract and trust-based assets.
At the same time the FCA has confirmed that it will question more than 3000 advice firms about the suitably of this transfer advice. It says this exercise will be used to ascertain any further potential customers risks associated with DB transfers.
Many in the industry have described these figures are alarming and should cause concern, for both companies, and pension providers.
Welplan Pensions chief executive Bruce Kirton says: “This should cause concern at both companies and pension providers.
Companies need to ensure their members are getting access to the right type of financial advice to ensure this money is not being invested in unscrupulous investments and scams.
They could also could do a lot more to encourage DB members to switch into the company’s DC scheme or low cost master trust.”