Pension savers tempted by record-high DB transfer values

Its study among over-40s with defined benefit pension savings found 31% are tempted by rising transfer values offered by schemes enabling them to take transfer values now in return for giving up future payouts.

The numbers tempted to transfer out falls among the over-55s – however, more than one in four (26%) of over-55s questioned said they would consider transferring defined benefit savings into cash or other pension schemes.

Analysis shows transfer values for defined benefit schemes are now at a record high following the EU Referendum, which saw bond yields at an all-time low.

MetLife’s research shows one in two over-40s savers have some of their pension savings in final salary schemes with around 11 million workers and pensioners still members of private company schemes.

Simon Massey, Wealth Management Director at MetLife UK, said: “The record high for final salary transfer values is tempting savers to give up the security of a guaranteed income for non-guaranteed options, but there is a real risk that people will regret their decision.

“Guaranteed income is absolutely vital to ensure that people can have a comfortable standard of living in retirement and final salary schemes, along with other solutions such as guaranteed drawdown, provide that certainty.

“Anyone considering transferring out of a final salary scheme should take independent advice, which is why we are encouraging broader retirement conversations looking at the complete range of options savers have, including guarantees.”