The typical value of defined benefit (DB) pension transfers is now greater than the average price of a house, according to research by Royal London.
The provider found the most common transfer value lay in the range of £250,000 to £500,000. By comparison, the average UK house price was £216,000 in March 2017, it said.
Royal London said the volume of transfers out of final salary pension schemes had grown more than 50% in the last year.
The firm had surveyed more than 800 financial advisers, and found the vast majority of clients transferring were in their 50s, with the typical cash sum offered worth between 25 and 30 times the value of the annual pension given up.
However, according to one in four advisers most of the transfers are worth as much as 30 to 40 times the annual pension foregone.
The most common reasons people wanted to go ahead with the transfer was to obtain a more flexible income in retirement, followed by the attractiveness of large transfer values and inheritance considerations.
People also cited access to greater tax-free cash and to take benefits earlier than the DB scheme allowed, as reasons to transfer.
Advisers were asked for reasons they would advise against a transfer. The principle concern cited was a worry the client would lose their income from the DB scheme.
Advisers said they had also recommended against transferring because they were concerned that the investment risk associated with the transfer was not appropriate for the client, or they thought the transfer value represented ‘poor value'.
Royal London director of policy Steve Webb (pictured) said: "It is clear that large and growing numbers of people are choosing to exchange the promise of a regular pension in retirement for a large cash lump sum.
"For some people, the value of their pension pot will be greater than the value of their house. This makes it all the more important that people think very carefully before making a transfer, and take full account of independent financial advice before making such an irrevocable decision."
‘Process takes far too long'
In the survey advisers also expressed frustration with the length of time it could take to obtain information from schemes in order to provide proper advice on transfers.
Of the 800 advisers asked, 500 said they ‘sometimes or often' had to get a new transfer value quote because the three month window of validity had lapsed before the advice process could be properly completed.
The vast majority said they ‘strongly supported' an initiative for information to be supplied by schemes alongside transfer value quotes.
Webb said: "Sometimes the process takes far too long, through no fault of the adviser. We need a system where pension schemes provide on day one all of the information needed to decide if a transfer is a good idea or not. This would make it a lot easier for schemes, advisers and, most importantly of all, consumers."
Webb previously asked The Pensions Regulator to look at whether the process could be streamlined after an adviser complained to Royal London that the three-month validity of transfer values was too short a period to allow all necessary information to be collected from the pension scheme.
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