Pension savers unable to move their cash as trustees use emergency powers

The Telegraph

Savers who want to ditch defined benefit pensions as their employers struggle to survive may find themselves trapped by trustees using emergency powers to halt transfers.

Businesses facing financial hardship have been the first to see trustees of their staff pension funds block members from moving their cash for three months during the pandemic.

This stops anyone wanting to transfer out of defined benefit pensions, which pay a guaranteed income in retirement, into more flexible but riskier “defined contribution” funds...

...James Baxter of Tideway Investment, which advises savers on pension transfers, said pilots from British Airways are likely to be in a situation where they would lose out from not transferring out of their scheme in the event of a collapse.

Mr Baxter said pension transfers have been developed a poor reputation but that there are cases in which members would be better off by flexibly accessing their pot. 

He said: “The FCA has to be careful about saying DB schemes are risk free. That might be the case for some but clearly not for all and now some people are trapped.”

Read the full article on the Telegraph website

The Telegraph

18 May 2020

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