Concurrent with this rise, is an increase in schemes choosing to provide full decision making support to their members at the point of retirement, in order that they can make better informed decisions - and that the scheme and sponsor can lessen any reputational risks to themselves.
Ben Roe, senior partner and head of the Member Options team at Aon, said: “Our survey highlights that the UK’s DB schemes are seeing the full effect of Freedom & Choice, with both schemes and members now having some points of reference from other schemes on the way that DB to DC transfers can be undertaken.
“Most telling in this respect is the level of support that schemes are now offering to members. Given the industry’s concerns around the quality and cost of financial advice, trustees and sponsors are increasingly putting in place preferred independent financial advisers (IFAs), financed by the members or in 80% of cases by the sponsor or trustees.
Ben Roe continued: “There is still some debate about the level of support that a scheme can or should offer, but it is clear that reducing the barriers for members to engage with advice or streamlining the process, does help ensure that members make the most appropriate decision at retirement. We fully expect that this trend will continue.”
Key findings of the survey
Transfer values
- 90% of schemes have seen an increase in the number of requests from members for a transfer value over the last 18 months
- 40% of schemes have seen a significant increase
- 30% of schemes have taken action to increase the level of automation of transfer value calculations in the last 18 months
Member support
- 16% of schemes are just following statutory requirements
- 55% are including wording in retirement packs about the transfer value option but not figures
- 18% are including figures in retirement packs setting out the transfer value amount
- 10% are providing members with figures in retirement packs along with online modelling tools and/or paid for IFA advice
- A further 10% of schemes are considering making online modelling tools and/or paid for IFA advice available within the next 12-18 months
Ben Roe said: “These results represent a significant difference in members’ appetite for transferring and also in the mindset of schemes to the way they deal with this change. A more standard approach – involving offering advice and avoiding the risk of members making the wrong move – is gradually evolving and this is enabling more trustee boards to feel comfortable in initiating member options exercises.”
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