A number of cautionary notes have been flagged up in the Technical Press warning members of Defined Benefit Pension Schemes (Final Salary Schemes) not to request pension transfer values before speaking to a financial adviser.
Members of Schemes are being warned that there is a risk that individuals “get blindsided by a big number” when they get a cash equivalent transfer value (CETV) from their defined benefit (DB) scheme.
The advice is, “The first thing they should do is to talk to a financial adviser to see if a transfer is appropriate for their situation.”
Following the introduction of pension freedoms in 2015, the volume of defined benefit pension transfers has been soaring, as savers seek to take advantage of sky-high transfer values and move their nest eggs into defined contribution schemes in order to access their cash.
Figures published last year by Mercer, the Pension Administrators, showed that as much as £50 billion has been pulled from Final Salary Pension Schemes in the previous two years.
Transfer is not always the best option. Beware!