31% of retirement savers would consider transferring their guaranteed final salary pension benefits into cash lump sums or defined contribution schemes, according to new research from MetLife.
The numbers tempted to transfer out falls among the over-55s – however, 26% of over-55s questioned said they would consider transferring defined benefit savings into cash or other pension schemes.
Transfer values for defined benefit schemes are now at a record high following the EU referendum, which saw bond yields at an all-time low. MetLife’s research shows one in two over-40s savers have some of their pension savings in final salary schemes with around 11 million workers and pensioners still members of private company schemes.
MetLife says that savers are increasingly valuing flexibility over their pension savings, but warns that this is often at the expense of guaranteed income. It has launched a campaign to deliver Real Pension Freedom, supported by advisers, focusing on the valuable role guarantees can play in retirement.
Simon Massey, wealth management director at MetLife UK, said: “The record high for final salary transfer values is tempting savers to give up the security of a guaranteed income for non-guaranteed options, but there is a real risk that people will regret their decision.
“Guaranteed income is absolutely vital to ensure that people can have a comfortable standard of living in retirement and final salary schemes, along with other solutions such as guaranteed drawdown, provide that certainty.
“Anyone considering transferring out of a final salary scheme should take independent advice, which is why we are encouraging broader retirement conversations looking at the complete range of options savers have, including guarantees.”
MetLife’s research shows men are more likely to have defined benefit schemes than women – 55% of over-40s men have final salary schemes compared with 46% of women. And they are more likely to consider transferring cash as 32% of men said they would look into compared with 29% of women.
