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SpanishUK. Pension transfers could cost members £2,600 over expected lifetime
Pension members choosing to transfer out of their employer’s scheme could receive an income that is £2,600 lower over their expected lifetime, according to research by XPS Pensions Group.
The report, Member Outcomes Under Freedom and Choice, published today (7 August 2018), looks at data on defined benefits (DB) scheme transfers, collated by XPS Administration over the period since 2016.
The research also found:
Depending on the choice of retirement vehicle chosen to receive a transfer, an individual could run out of money seven years earlier if they draw an income of £10,000 per year, and could risk leaving an inheritance of £340,000 lower at the end of their expected lifetime.
In an analysis of more than 6,000 transfers from DB schemes, 9% went to a full self-invested personal pension (SIPP), and 86% to a platform SIPP.
The average transfer size is £230,000, which could equate to an annual pension of between £7,000 and £10,000.
An additional 1% of fees each year, charged as a member moves from an occupational pension scheme into an SIPP, could cost from £100,000 to £150,000 on a £250,000 transfer over a 20-year investment.
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