Transfer my defined benefit pension - are you crazy?
Does your business have a DB scheme? If so you will know that deferred members have the option to request a "cash equivalent" from the scheme and transfer it to their own pension.
This shouldn't be done lightly because members would be giving up a guaranteed income with built-in increases that will last for the rest of their life.
But for some, it could make sense. Take John for example, he's 57 and was made redundant three years ago. As he can't find a suitable job, he's emptying his savings waiting for his £18,000 a year pension to start at age 60.
Then he found out his transfer value was £695,000. His adviser explained this would allow him to take the £25,000 pa income he needs now and then reduce it when his State pension starts at 66. His income is projected to last his lifetime.
If you run a DB scheme we would encourage you to ask yourself 3 questions:
- Are deferred members aware they have the option to transfer?
- Could you make it easier for them to find out their value? For example, to include it on annual benefit statements?
- Do your members have access to expert advice where they can find out more without commitment?