Interest in defined benefit transfers on the rise as savers respond to low gilt yields and pension freedoms | Old Mutual Wealth
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Interest in defined benefit transfers on the rise as savers respond to low gilt yields and pension freedoms

26/09/2016

Low gilt yields, pension freedoms and uncertainty over the future of some defined benefit (DB) pension schemes has prompted increased interested in pension transfers, Old Mutual Wealth retirement experts today report.

  • Transfer Value Analysis Service shows cash equivalent value from DB schemes on the up
  • Customers re-visit transfer value reports carried out earlier this year
  • Transfers to retirement platform already exceed 2015 total

A number of customers that requested transfer value analysis (TVAS) reports earlier in the year are revisiting that assessment and requesting a second cash equivalent transfer value (CETV) from their employer-backed scheme.

Where clients submitted a CETV to the Old Mutual Wealth TVAS desk earlier this year and are now revisiting that analysis, the updated CETVs available from their current DB scheme are on average around 10-20% higher, although this varies from one scheme to another.

The Old Mutual Wealth platform has received more transfers-in from final salary schemes in the year-to-date than in the entire of 2015.

Although the CETV is not the only factor to consider when deliberating over a pension transfer, it illustrates why some consumers may be more inclined to look at the possibility of transferring out of their DB scheme.

Individuals considering a final-salary transfer should exercise caution since it involves giving-up secure income from their employer-funded scheme in exchange for a defined contribution pension pot. Although this can give them increased flexibility, it also involves a number of risks.

Anyone considering it must take advice from a qualified professional financial planner (if the value is £30,000 or more) and should take the time to consider all their options carefully, ensuring they build a sustainable retirement income strategy tailored to meet their individual needs.

Jon GreerOld Mutual Wealth pension expert Jon Greer says:

“A combination of factors are contributing to a rise in the popularity of DB transfers.

“Pension reforms introduced last year mean individuals can now take pension income from a defined contribution (DC) scheme as they wish, and the money can be passed on to their family in a tax-efficient manner when they die. It means that many people with a DB pension are considering whether DC gives them more flexibility.

“Equally, low gilt yields have contributed to a general increase in the transfer values available. With rates at record lows, many people view this as the optimal time to cash-out of their DB scheme.

“Uncertainty is also contributing to the trend, with some people also questioning the security of their DB pension rights following some high profile cases that have come under the media spotlight.

“However, nobody should enter into a DB transfer without being fully aware of the risks. It is vital to make a rounded assessment of the pros and cons in the context of your overall financial circumstances. A DB transfer can be the right thing for some, but it can be a disastrous choice if you sacrifice secure-income and leave yourself at risk in later-life. Get proper financial advice from a qualified professional and take your time to make an informed decision.”

For more information contact:

Mike Glenister
michael.glenister@omwealth.com
0207 7789 638
07469144535

Tim Skelton-Smith
tim.skelton-smith@omwealth.com
07824 145076
02380 916998

Notes to editors:

About Quilter plc:

Quilter plc is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

Quilter plc oversees £116.5 billion in customer investments (as at 30 June 2018).

It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset investment solutions and discretionary fund management.

The business is comprised of two segments: Wealth Platforms and Advice and Wealth Management.

Wealth Platforms includes the Old Mutual Wealth UK Platform; Old Mutual International, including AAM Advisory in Singapore; and the Old Mutual Wealth Heritage life assurance business.

Advice and Wealth Management encompasses the financial planning network, Intrinsic; Old Mutual Wealth Private Client Advisers; discretionary fund management business, Quilter Cheviot; and the Multi-asset investment solutions business.

The Quilter plc businesses are being re-branded to Quilter over a period of approximately two years:

• The Multi-asset business is now Quilter Investors

• Intrinsic to Quilter Financial Planning

• Private Client Advisers to Quilter Private Client Advisers

• The UK Platform to Quilter Wealth Solutions

• The International business to Quilter International

• The Heritage life assurance business to Quilter Life Assurance

• Quilter Cheviot will retain its name

This press release is for journalists only and should not be relied upon by financial advisers or customers.

Please remember that past performance is not a guide to future performance. The value of investments and the income from them can go down as well as up and investors may not get back any of the amount originally invested. Exchange rate changes may cause the value of overseas investments to rise or fall.

This communication is issued by Quilter plc.  Registered office: Millennium Bridge House, 2 Lambeth Hill, London EC4V 4AJ, United Kingdom. Registered number: 6404270.  Registered in England.