FT Adviser (20/09/2018) – Funds transferred out of pension schemes have decreased for the first time since the beginning of last year, falling by 24 per cent in the second quarter of 2018, official data has shown.
Data from the Office for National Statistics (ONS) out today (20 September) showed individuals transferred out £8.2bn in the three months to June, down from £10.6bn in the previous quarter.
In 2017, £36.8bn was withdrawn from pension schemes.
The data did not specify the origin of the funds, but it is expected that the majority of these transfers are from defined benefit (DB) schemes.
Several pension providers have pointed to a perceived slowdown in transfers to self-invested personal pensions in recent months.
Until now, the volume of DB transfers had been soaring, as savers sought to take advantage of sky-high transfer values and to move their nest eggs into defined contribution (DC) schemes in order to benefit from the pension freedoms.
In October, the FCA found advice on DB transfers had been unsuitable or unclear in more than half of the DB pension transfers where the recommendation was to move the retirement pot.
Concerned about the findings, the regulator announced a data review of all financial advice firms which hold pension transfer permissions during this year.
Alan Chan, director and chartered financial planner at London-based IFS Wealth & Pensions, said the demand side might have also slowed down after the Bank of England raised the interest rate to 0.75 per cent in August.
He said: “The increase in the base rate in August may have caused a further drop in transfer values from the heights we’ve seen over the past year or so.
“This would make a transfer appear less attractive to the clients and so [fewer] people [are] looking to transfer out.”
Full article link: https://www.ftadviser.com/pensions/2018/09/20/pension-transfers-dip-24-in-second-quarter/
