Quotes Rise by 60% for Transferring Out of Defined Benefit Pension Schemes
The number of people who are asking for advice on leaving a defined benefit scheme has risen 60% in a month .
Financial consultancy firm, Mercer, have seen a 60% rise in the number of UK employees with defined benefit pensions asking for a transfer quote. The number of quotes has risen from 1,500 a month to more than 2,500 in March.
Furthermore, because pension deficits are so large at some of these companies, the companies themselves are offering to pay for the financial advice for their employees in order to get the debt off their books.
Tesco, for example, has nearly 4 billion GBP debt thanks to its pension scheme which costs 270m per year to keep running. The Pension Protection Fund revealed as at the end of March this year, that the 6,057 private sector defined benefit schemes it covers were running a combined deficit of close to £293bn at the end of March this year. A year ago the figure was £39bn.
In other words, the deficit for final salary pension schemes TRIPLED just in the last year. So, both companies and employees are heading for the exit with a mutually beneficial outcome.
Members are obliged to take financial advice before transferring out of a defined benefit pension scheme, but are free to ignore the recommendation if they wish. In fact, there have been stories of clients asking regulated firms to “fake” the advice for them, so that they can quickly cash-in or move their pension. In a highly regulated industry, most sensible advisers are rightly saying they can’t do that.
Under new rules written into the legislation and which are presently subject to consultation by the FCA, individuals with more than £30,000 in a fund must seek regulated financial advice overseen by a qualified transfer specialist.
For Brits who wish to retire abroad, we can help you avoid UK taxes and get a flexible investment via a QROPS, which is an offshore SIPP.
1 in 10 Brits or around 6.4m people now live abroad. We can help you avoid tax on death of your pension after 75 and possibly reduce your income tax bill.
Please email us for a transfer analysis.