Defined benefit (DB) pension scheme trustees have been urged to provide more support for savers, after research from Barnett Waddingham revealed that 13 per cent of DB members are more likely to transfer out of their pension due to the rising cost of living.

This figure increased to 18 per cent amongst under 40s, with the survey also revealing that nearly two in five (39 per cent) DB members are worried they won’t have enough money to see them through retirement, increasing to 46 per cent for those over 45.

Many members also displayed a lack of confidence when it comes to making decisions about their DB pensions, with more than one in five (22 per cent) actively unconfident, rising to 30 per cent amongst women.

Barnett Waddingham suggested that this is likely connected to the "polarised landscape "of support offered by DB schemes, revealing that while 51 per cent of savers have had support, 49 per cent of members have not had any support from their DB scheme, rising to 58 per cent for those aged over 40.

Of those who received support, 31 per cent benefited from frequent communication about their options in the run up to retirement, while 24 per cent received financial advice from an independent financial adviser (IFA) appointed by the scheme that they paid for themselves, and a further 22 per cent had advice from an IFA the scheme paid for.

Of those without support, 60 per cent said that they would appreciate support from their scheme, with 43 per cent stating that they would particularly benefit from more frequent communications.

In addition to this, 41 per cent wanted 1-1 guidance sessions provided by a financial adviser, organised by their scheme, while 32 per cent wanted financial advice from an IFA paid for by the scheme, although 22 per cent would be happy to pay for that themselves.

Despite the contrast in the level of support offered, the survey results suggested that trustees’ offerings seem largely aligned with the desires from members.

Indeed, 48 per cent of DB pension trustees say that their scheme has partnered with a specialist IFA, with the cost of advice met by the scheme or company sponsor, while 40 per cent have done so with the cost met by members.

In addition to this, more than a third (38 per cent) say they have provided a contribution to the member’s own costs of obtaining financial advice.

The research also revealed that a "massive" 76 per cent of trustees believe that schemes should be partnering with an IFA to support members at retirement, so long as they have the support from the sponsor, while only 22 per cent don’t agree.

Commenting on the findings, Barnett Waddingham partner, Debra Logan, argued that "now more than ever, it’s vital trustees and scheme sponsors are rallying to provide the best support to members".

She continued: "The cost-of-living crisis is creating a ripe space for scammers to prey on those struggling to make ends meet.

"The Pension Regulator’s guidance last year gave trustees the power to halt suspicious transfers if there’s a heightened risk it may be part of a scam, but its vital members feel empowered to spot scams themselves too.

"Fundamentally, nobody under 55 could transfer out of their pension into cash – anybody who says they can make that happen is lying.

“But there is a clear gap in knowledge and confidence amongst members. Much of this can be solved through better communication and knowledge-sharing, as well as bespoke support from an IFA.

"It’s positive that there’s a clear alignment amongst members and trustees in favour of offering financial advice via a scheme – the next step is to put that into practice and ensure all members have the tools they need to make the best decisions about their pension.”


This article first appeared on our sister title, Pensions Age.

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