Nearly one in three members of defined benefit schemes are expected to transfer out of the funds to access the new Budget freedoms, according to a specialist pensions actuary.
Hymans Robertson’s annual survey of the pension arrangements of the FTSE 350 predicts a 30 per cent take-up of transfers from DB to DC schemes once the new pension flexibilities become active in April 2015.
The figure is far higher than the projections included in the Government’s response to the freedom and choice consultation, where it reported the majority of estimates it received were between 10 and 20 per cent.
Last week, Money Marketing revealed how some providers were reluctant to accept transfers from DB schemes, even if they had taken regulated advice, potentially stopping millions of savers from accepting the new freedoms.
The latest estimates from Hymans suggest far more people than expected could find their route to the flexibilities blocked.
The actuary says 30 per cent of transfers equates to £100bn of pension liabilities moving off the balance sheet of the UK’s 350 largest firms.
Hymans partner and head of corporate consulting Jon Hatchett says: “We’re likely to see a wall of money flowing out of DB schemes in the next decade as consumers embrace the Chancellor’s pension reforms and switch to DC pensions.
“With companies facilitating good offers we would expect 30 per cent of members would look to transfer to DC schemes in the wake of these changes. This could remove around £100bn of risk from FTSE 350 schemes and reduce long-term liabilities by £15bn.”