Mercer’s data indicated that the number of people wanting to understand what their DB scheme was worth reached around 2,500 a month by March 2015, from around 1,500 people per month in 2014. Many of these requests were made by individuals rather than through the trustees or employers.
The firm expects this figure to rise as more employers and trustees make it easier to transfer DB schemes, a pension plan where an employee is guaranteed a monthly benefit during retirement based on factors like earnings and age.
“We suspect that the advertising and publicity around the Pension Wise guidance service and the pension announcements made in the 2015 Budget has spurred people to investigate what their DB pension scheme is actually worth,” said Matthew Demwell, partner at Mercer.
“It’s clear that these changes have appealed to a number of people. However, these are just quotations.”
“It remains to be seen how many people will actually accept the quotation and transfer out of their defined benefit scheme,” he said. “We suspect that some may be reluctant to progress if they have to pay for financial advice themselves.”
In the 2014 Budget, Chancellor George Osborne announced that DC pension-holders would not have to buy an annuity with their retirement savings.
“Genie out the bottle”
The number of employers willing to pay for advice to help individual members has also risen, and according to Demwell this represents an “opportunity for employers and trustees to reduce the sometimes crippling burden of pension costs”.
He added that the process must be carefully managed to ensure that people have enough money in their retirement. “It’s clear that now the freedom and choice genie is out of the bottle, things won’t be the same again.”
Mercer administrates the pensions of around one million people in the UK, including 720,000 non-retired people.
In March, the Financial Conduct Authority announced plans to introduce a new regime for those advising on transfers from DB schemes where a pension transfer specialist checks the advice given.
On Tuesday it was announced that there had been a peak in the number of people accessing the UK government’s Money Advice Service ahead of the pension freedoms in January this year.