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Wary schemes to block millions from pension freedoms

Millions of people may find their access to the pension freedoms blocked as occupational pension schemes remain undecided about what they will offer to members from April, research claims.

Over half of schemes are yet to decide whether they will allow members to access the freedoms from within the scheme, while 15 per cent confirm they will not be offering the flexibilities, according to a survey of 80 schemes conducted by actuaries Xafinity.

Just 5 per cent of schemes are planning to let members withdraw pensions as a lump sum, while only 2 per cent will offer full flexibilities including drawdown.

But a fifth say they will help members move to a scheme that will allow them to use the flexibilities.

Schemes and providers are under no obligation to offer any of the new pension options, but members have the right to transfer out.

Xafinity head of proposition development Paul Darlow says: “This leaves millions of people near to retirement with considerable uncertainty – they have the choice between: delaying their retirement; retiring in their existing scheme and missing out on these new flexibilities; or moving their benefits into a new pension scheme in which there may be significant costs and charges.

“Our advice is that members approaching retirement with a defined contribution pension should be contacting their pension schemes now to understand their options.  We would also urge pension schemes to communicate proactively regarding the new flexibilities and if they will be available.”

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