Half (50%) of defined benefit (DB) pension scheme members aged 55 and over have opted to speak to a financial adviser if offered this service for free by their employer, according to research by Willis Towers Watson.
The research is based on data provided by financial advisory firms and examines 15,700 members of DB pension schemes aged 55 and over that are yet to draw their pension and that have been offered independent financial advice paid for by their pension scheme’s sponsoring employer since the pension freedoms were introduced in April 2015.
The research also found that more than a third (36%) of those who spoke to a financial adviser decided to transfer out of their DB pension scheme.
The research also found:
- Of those who transferred out of the DB scheme, 45% bought an annuity.
- 35% of those who transferred out opted for drawdown.
- One-fifth (20%) of those who transferred out of their DB pension scheme took the majority of their new defined contribution (DC) pension fund as cash.
Stewart Patterson (pictured), head of liability management at Willis Towers Watson, said: “Members of DB schemes don’t always realise that pension freedom does not automatically extend to them, still less that they would usually have to take financial advice before being allowed to take advantage of it. The cost of this advice can put people off examining their options, so it will make a big difference if the employer pays for this.
“Anyone considering giving up a DB pension should think carefully before doing so, but many DB members will like having the choice. It’s common for people to have several DB pensions from different employers, so transferring one pension can sometimes be about getting a mixture of stable lifetime income and savings that the individual can dip into as they wish.”