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Pension transfers rocket nearly 600%

Transfers from defined benefit (DB) to defined contribution (DC) pension schemes have increased nearly 600 percent in two years, according to data from the Financial Conduct Authority (FCA).

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In a freedom of information response published on its website, the watchdog revealed there were 5,056 transfers between October 2015 and March 2016, and 34,738 DB transfers for the same period in 2017/18 - a 587 percent increase.

 

The data provided covers DB to DC transfers included in the Retirement Income Data Request (RIDR), which is collected from a sample of 54 firms, the FCA said.

 

The regulator estimates the survey covered 95 percent of DC contract-based pension scheme assets when it was introduced in 2015, but this is likely to have changed slightly according to developments in the market.

 

The data does not include trust-based occupational pension schemes or DB schemes, which make up the majority of assets in the workplace pensions savings market, the FCA noted.

 

It also said the number of firms providing the DB to DC data had increased over time, which might indicate that changes in the data are not necessarily due to market changes, but may be due to more firms reporting data over time.

 

The watchdog also stressed the figures provided have not been adjusted to make an estimate for the entire market.

 

It added that the RIDR data request will be replaced from October 2018 by two new regulatory

returns (REP015 and REP016). The two new regulatory returns will be submitted by the entire market.

 

Bruce Kirton, chief executive of Welplan Pensions, said: “This should cause concern at both companies and pension providers.

 

“Companies need to ensure their members are getting access to the right type of financial advice to ensure this money is not being invested in unscrupulous investments and scams. They could also could do a lot more to encourage DB members to switch into the company’s DC scheme or low cost master trust.”

 

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