UK pensions freedoms: Number of defined benefit (DB) to defined contribution (DC) pension transfers lower than expected, finds Financial Reporting Council report
We hope you didn't bet your pension pot on there being a big switchover from defined benefit (DB) to defined contribution (DC) schemes when the pension freedoms came into force last year – research published today by the Financial Reporting Council (FRC) discovered that there has been relatively low levels of scheme swapping.
The study by the Joint Forum on Actuarial Regulation (JFAR) – which was founded by a number of institutes, including the FRC, in 2013 – found that, although there had been an increase in transfers from DB to DC schemes since the freedoms came in, the overall number was still quite low.
The report suggests that the rate of transfers may have been lower than expected thanks partly to a lack of understanding about what different products had to offer, a lack of advice available and trustees not actively promoting transfers to scheme members.
"As we know, the new pension freedom rules change the landscape for people saving for their retirement," said Stephen Haddrill, chief executive of the FRC and chair of the JFAR. "It is vital, therefore, that the quality of actuarial work that supports the market is of the highest quality. As a result of this review, I’m pleased to see the JFAR has decided it will monitor ongoing transfer activity and related actuarial matters."