Pension transfer values have come under the spotlight again after schemes were asked if they were being too generous with offers of lump sums to savers looking to cash out.
The move follows concerns that overly-generous payouts could have a negative impact on the remaining funds of Defined Benefit schemes.
The BBC reported that the Pensions Regulator had written to 14 schemes encouraging them to consider making reductions in transfer value offers.
Cash sums offered to savers to transfer out of DB schemes have been increasing as it becomes more expensive to cover pension liabilities.
The Pensions Regulator is reported to have told pension trustees that it expects transfer values to be reviewed if there were concerns over their sustainability.
Pension transfers hit a record £10.6 billion in the first quarter of this year, up from £10.3 billion in the final quarter of 2017.
Your pension is crucial to making the most of your savings and planning for the retirement you desire. Therefore, you are required to take professional advice before considering transferring out of a Defined Benefit scheme (unless your transfer value is less than £30,000).
A decision to quit a DB scheme immediately transfers the risk from the sponsoring employer to the individual, said Clifton Wealth’s Anthony Carty.
“Whilst (hopefully) the initial decision to transfer may seem wise, the ongoing monitoring and stewardship of these funds is super important.”Tweet