Businesses fielding record pension queries

Thirty-six percent of businesses have seen staff enquiring about transferring from a DB to DC scheme; however, half say their staff are confused or in the dark about the pension freedoms; Close Brothers Asset Management has launched a dedicated DB Pension Review service in response to demand.

Since the new pension freedoms in April 2015, over a third (36 percent) of employers have experienced staff enquiring about transferring from a defined benefit (DB) to a defined contribution (DC) pension scheme to take advantage of these freedoms, according to the latest research from Close Brothers Asset Management (CBAM). However, the Close Brothers Business Barometer, which questions almost 900 employers across the UK, found that 50 percent of employers admitted that staff in both DB and DC schemes had either a limited understanding of the pension freedoms, or were confused about what the changes meant for them.

This has caused more employers and pension scheme trustees to consider how they can communicate these changes to their pension scheme members and how they can provide them with suitable guidance and access to financial advice.Building on over 45 years’ experience as a leading provider of financial education and advice, CBAM has responded to this growing need with its DB Pension Review Service for high net worth clients. This includes an education-led element to enable employers and trustees to communicate these changes to their members and a specialist financial advice proposition for individuals considering DB transfers.

CBAM has also strengthened its UK-wide team of specialist pension transfer advisers, and the service includes a financial modelling tool which factors in a full spectrum of long-term considerations - from lifestyle decisions to other sources of income - as well as accounting for the new pension options in retirement. Looking beyond simple measures like critical yield helps to ensure well-formulated and robust advice tailored to an individual’s specific circumstances, ensuring awareness of the potential risks and benefits.

Jeanette Makings, Head of Corporate Services at CBAM, commented:“The pension freedoms have dramatically changed the way individuals can access their pension savings, and it’s therefore to be expected that more DB members will want to review whether a transfer is suitable for them. However, this is a complex and potentially high risk strategy and it is vital that individuals considering a transfer get professional advice from specialists who are experienced in reviewing pension transfers.

It’s also a difficult time for employers and trustees as they grapple with the need to communicate these changes to their members and provide them with access to expert guidance and advice to ensure that their members make informed decisions. For the majority of employees, a transfer may not be suitable, so it is important that members are not only also educated on the changes, but also receive that specialist one-to-one pension transfer review. We can help employers and employees to navigate guidance and advice, and are well-placed to provide employers with a complete solution to support their members and fulfil their responsibilities.”

Created on: 13-Jan-16 16:01


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