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09-05-2019

Schemes must consider partial transfers for members - XPS

Every pension scheme should consider offering partial transfers so members are not forced to make an “all-or-nothing decision” on their pension benefits, XPS Group has said.

In its latest member outcomes report, the group said that 30 per cent of its clients surveyed are “actively investigating” offering partial transfers and it believes more should be doing so.

According to its latest figures, self-invested personal pension products (SIPP) still dominate the market, with 99 per cent of the 1,800 surveyed opting to move to a SIPP with an average transfer of less than £10,000 a year. 

XPS Group senior consultant, Helen Ross, said: “More pension scheme trustees are investigating offering their members a partial transfer. Current availability of this option is minimal. If this changes it could make a real difference to member outcomes.”

The group added that the SIPP market will offer a range investment opportunities and flexibility, often with a variety of charges thrown in, however, many members will not utilise these and should therefore have more option. 

According to its survey, the average transfer value has risen by over 15 per cent to £275,000.

XPS Pensions Group principal, Wayne Segers, said: “With so many leaving DB schemes, there is no time to wait on providing clear robust support to help members understand the consequences of their options. 

“New Financial Conduct Authority guidelines are driving better support from advisers but trustees and employers have a vital role to play in initial education. It is therefore encouraging to see that trustees and employers are beginning to take action to improve member outcomes.”

Out of the clients surveyed by XPS Group, 40 per cent are considering implementing a communication strategy to help members make a choice, 25 per cent are looking at introducing a low-cost receiving vehicle for members and 10 per cent have an independent financial adviser in place.

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