Demand for transfers from Defined Benefit (DB) schemes into defined contribution (DC) pension schemes has fallen significantly for those under the age of 40, according to pension and investment software provider Selectapension.
In the last 12 months, the number of cases for those under the age of 40 looking to transfer out of a DB scheme has fallen by over half (53%) compared to the same period a year ago (September 2014 – August 2015). There are now fewer DB schemes open to employees, and younger employees may be less likely to transfer and lose a rare asset.
However, in contrast, for many people approaching retirement, the flexibility offered by the pension freedoms via Defined Contribution (DC) schemes remains an attractive option, and demand for transfers is still climbing for older clients. According to Selectapension, there has been a 67% increase in over 60s reviewing their DB scheme with their Adviser in the last year, compared to the same period a year ago (September 2014 – August 2015).
For Advisers who are not authorised or don’t have the time or inclination to manage complex cases, Selectapension launched a pension transfer advice service last year. Demand has grown month by month and the average transfer value for completed cases is £195,000. Transfer values through the service tend to be higher than the average as cases must be referred by a Financial Adviser.
Andy McCabe, Managing Director, Selectapension commented: “For younger employees, retirement is a long way off and their current pension pots may be small so demand for review is not as pressing.
“However, we are still seeing increasing demand for those approaching retirement who have a much clearer picture of their individual needs for later life. Transferring is by no means the best option for all and so professional advice is vital to the process. As Advisers face increasing demand from those reaching retirement, robust technology to support them is crucial.”
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