A third of defined benefit (DB) pension scheme members have yet to rule out transferring to a defined contribution (DC) arrangement when the new pension reforms come into effect from April, according to research by Hargreaves Lansdown.
Its survey of 1,037 employees also found that 7.8% of respondents expressed a firm intention to transfer. According to Hargreaves Landowns’ projections, based on 6.87 million deferred and active DB scheme members, this could equate to 535,860 DB members taking this course of action.
The survey also found:
- Around two-thirds (67%) of respondents have no intention of transferring from their DB pension schemes.
- Among respondents who have decided to transfer, their reasons for doing so included: the desire for a more flexible income (53%), wanting to to pass what is left of their pension pot to their children when they die (44%), wanting to retire early (29%) and preferring to take a lump sum to an annual income (18%).
- Of the 67% that do not intend to transfer to a DC pension arrangement, 80% said they will not do so because their defined benefits are very valuable.
Nathan Long, head of corporate pension research at Hargreaves Lansdown, said: “The majority of scheme members recognise the value of their defined benefit pensions and have already rejected the idea of a transfer.
“Most retirees will be well served with a mix-and-match approach from their employer; a balance of guaranteed income to cover essential spending in retirement, coupled with some additional flexibility for the non-essentials.
”Transfers can make sense in certain circumstances, often at the point of retirement. These circumstances should be considered the exception rather than the rule.”