Faculty of Actuaries president Stewart Ritchie says although the practice is popular amongst employers wanting to reduce their liabilities it can be less beneficial for members.
He says: “We know that the concept of cash-in-hand inducements, or other enhancements of transfer values, is becoming increasingly popular among employers trying to reduce their pension liabilities.
But what is much less clear is whether it is good for members. The costs of replicating their benefits outside their schemes may be much higher than the transfer values offered, even including inducements.”
He adds: “We urge people who receive such offers not to be dazzled by the prospect of cash today, and to take independent advice.”