Defined benefit pension transfer values ‘shooting up’

16th December 2016

Defined benefit pension transfer values ‘shooting up’

Six million people with defined benefit pensions have seen their transfer values shoot up in the last year, according to a major insurance company.

Under the rules of most defined benefit schemes, workers have the right to swap their pension entitlement for money.

According to the insurer Royal London, the cash that such people can get has soared over the last 12 months.

It says some are being offered “eye-watering” sums, often tens of thousands of pounds more than a year ago.

Workers with defined benefit pensions know exactly how much they will receive in retirement.

Such schemes are either based on a worker’s final salary, or on their career average earnings.

Workers with defined contribution (DC) schemes save into a pension pot, which they then use to buy a retirement income. The size of the pot depends on stock market performance.

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