A new pensions report by Royal London and Lane Clark and Peacock has revealed that savers who are ten years away from retirement risk losing almost 50% of the value of their pension should they choose to transfer out elsewhere.
The financial consequences could be bad too for those savers who are just one year away from retirement, with the average transfer value being just 75% of the full value of the pension. The latest research is based on a survey of 400 defined benefit schemes and uses the latest calculations brought in by the Financial Conduct Authority.
The research paper reads: "Anecdotally, there has been a perception that the DB to DC transfer market may have peaked, partly because of negative press coverage around the British Steel case, and the wider coverage suggesting that some people who have transferred have experienced poor outcomes."
The former pensions minister, Sir Steve Webb believes that more transparency is needed and thinks that the FCA's new way of calculating transfer values is a positive step forward.
"With around 200,000 people having transferred out of a company pension in the last couple of years, and thousands more doing so every week, it is vital that they have a clear understanding both of the advantages of transferring and of the valuable benefits they are giving up. "
"If this new way of assessing transfer values results in better informed conversations with impartial financial advisers before decisions are made, this would be a good thing."