People with final salary pensions urged to make sure they are financially ready for retirement
06.01.2022 - 18:33
/ dailyrecord.co.uk
People with final salary pensions are being encouraged to get ‘retirement ready’, as research indicates a lack of awareness could mean some end up missing out on the income they are owed.
The Pension Protection Fund (PPF) said the findings from its survey show an acute lack of understanding and engagement among some pension scheme members about their defined benefit (DB) pensions. These final salary schemes are often described as ‘gold plated’ as they promise savers a certain level of income when they retire.
The PPF is funded by a levy charged to pension schemes and pays out compensation for lost pensions if an employer collapses. It protects close to 10 million members belonging to more than 5,200 pension schemes.
Its research, based on a survey of 2,000 DB scheme members, found only 49 per cent were concerned about knowing how much their pension scheme is worth.
However, a third (33%) were concerned about not having enough to live on in retirement.
The PPF said savers may not be able to plan for their retirement without accurate information.
More than a third of DB pension holders meanwhile were unsure if they could transfer out of their pension scheme.
The PPF said DB pension holders must receive financial advice if they are considering transferring out of their scheme and their benefit is worth more than £30,000. It said that administrators can provide key information on pension values, scheme benefits and possibly even scheme rule changes that may affect what members receive when they retire.
Nearly half (48%) of DB pension holders surveyed had never met a financial adviser to discuss their retirement savings.
The research also found three quarters (75%) of DB pension savers did not know their pension was protected