Call To Offer Savers More Pension Transfer Choice

Retirement savers should have more choice than leaping off the all-or-nothing transfer cliff when moving funds away from a workplace pension, says a leading consultancy.

Instead, every pension scheme should have a partial transfer option.

Few direct benefit pension schemes offer this option although around 30% are considering the move, points out XPS Group in the latest Member Outcomes Survey.

The report highlights that 99% of the 1,800 retirement savers surveyed moved their funds to a self-invested personal pension (SIPP), but the average transfer was just £10,000 a year.

XPS Group senior consultant Helen Ross, said: “More pension scheme trustees are investigating offering their members a partial transfer. Current availability of this option is minimal. If this changes it could make a real difference to member outcomes.”

Disappointing variety

Although SIPPs offer wider investment opportunities and the option of accessing savings from the age of 55 under pension freedoms, many also come with higher charges and a range of benefits the retirement savers do not want or use.

Building on the survey for 2018, when 6,000 transfers were followed with an average transfer value of £235.000, the 2019 survey tracked another 1,800 transfers worth £500 million.

The average transfer value has risen was up 15% to £275,000.

“With so many members leaving schemes – approximately 1.5% of eligible members or 70,000 each year – there is still disappointingly little variety of destination for transfers, as the survey reveals 99% of members are moving to a SIPP,” said the report.

Give savers more options

“Given the low average size of pension transferred  we remain concerned that many members may not need, or benefit from, the potential upside that higher cost SIPP offerings can provide.”

The survey recommends pension providers should offer more support to retirement savers to help them make the best decisions about their finances.

XPS Group is also calling for pension providers to offer more low-cost transfer options, partial transfers and access to independent financial advice.

“Retirement savers not looking to use the extra features of expensive products should be made aware of the low-cost options,” said the report.

Read the full XPS Group Member Outcome Report 2019

Stay Connected

Latest News

Economic Impact Payments for US Expats

The US government is paying millions of dollars into the bank accounts of American expats as coronavirus economic impact payments and this guide will...

HMRC Explained

HMRC is short for Her Majesty’s Revenue and Customs. The HMRC collects the taxes and customs duties that the British government spends...

Difference Between Residence and Domicile

For British expats, their residence and domicile determine how much tax they are likely to pay, both in the country where they...

QROPS, Qualifying Recognised Overseas Pension Scheme

QROPS is a type of pensions that were designed to cater for the needs of British pension holders that move out of...

Where Do British Expats Live?

More than 5.5 million people from Britain live overseas and leave the country at a rate of around 2,000 a week.

Living In The Philippines, A Guide for Expats

Brilliant weather, a low cost of living and friendly, English speaking people makes The Philippines a popular destination for British expats.

LEAVE A REPLY

Please enter your comment!
Please enter your name here