Nearly one-in-five members have opted out of UK defined benefit (DB) pension schemes since the government introduced its Pensions Schemes Act last year.
According to Willis Towers Watson, a pensions consultancy, of the 15,700 members of DB schemes, half sought to speak to a financial adviser and over a third who did, transferred out of their scheme.
Almost half of those who transferred out bought an annuity, whereas 35% chose to drawdown their funds over time. A fifth chose to take the majority of their fund as cash.
The firm said that those with bigger DB schemes were more likely to opt out. For instance, members with a scheme value of over £250,000 (€318,000) were the most likely to transfer out, with a take-up rate 10% higher than the overall group.
“Anyone considering giving up a DB pension should think carefully before doing so, but many DB members will like having the choice,” said Stewart Patterson, head of liability management at Willis Towers Watson.
Members with small DB pensions, valued at under £30,000, have the option to exchange their pensions for a one-off lump sum. Take-up rates for this were approximately 50%, and in some cases as many as eight-out-of-ten took up the option.
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