Members should have a limited legal right to partially transfer their defined benefit (DB) scheme, according to a joint report from Royal London and LCP.
The report, Helping members make better retirement decisions, written by Royal London director of policy Sir Steve Webb and LCP partner Jonathan Camfield, calls on the government to take action after LCP's poll of 100 DB schemes in May showed just 15% offer partial transfers.
The report said where members have accrued benefits in several DB pots, they will be able to secure a regular guaranteed income and have more flexibility about how to use the rest of their pension rights.
However, this option may not be open to an individual with long-service in a single scheme, as most do not offer partial transfers.
During a conference hosted by LCP on 30 August, Webb said: "The all-or-nothing DB transfer approach is too risky and partial transfers are a good way of de-risking for long-serving workers."
The providers also suggest that while there would be challenges for schemes, partial transfers could be implemented in a cost-effective way.
It comes as LCP's survey also found more than 80% of schemes had seen increases in transfer value quotes and more than half of schemes had seen the number of transfers increase.
The right to partial transfers was also strongly supported by over 450 advisers in a separate Royal London survey, which was also included in the report. The survey, conducted in May 2017 receiving 806 replies from advisers further found 94% of advisers had seen a growth in the volume of requests for advice on DB to DC transfers. It also demonstrated around four fifths of advisers said the volume of transfers going ahead was up on a year earlier, typically by around 50%.
Also speaking at the conference about the options available to DB members, Camfield said: "If someone were to become redundant at age 59 for example, an early retirement or a transfer may be a life-saving option.
"However, it is incredible how even people high up in businesses are not aware of basic options, and general knowledge on the subject is essential to avoid bad decisions."
•How to treat different elements of the accrued pension. For example, where part of the pension is a ‘guaranteed minimum pension' (GMP), what would be the effect of a partial transfer on the GMP obligations of the scheme?
•How to treat small pensions. Where the cost of implementing a partial transfer is significant, relative to the size of the pension.
•How frequently individuals could undertake a partial transfer. Clearly there will be a cost to the scheme to provide transfer quotes for partial transfers, and it would be inappropriate for DB schemes to be treated like ‘cash machines' by members.
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