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Catch up with the latest press releases from LV=

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Better information on freedoms needed for DB members

Press release: 14/12/2016

Defined Benefit (DB) scheme members need better information about their options under the Freedom and Choice reforms, according to a new paper from LV=, the UK's most trusted and recommended insurer¹.

While there has been much talk of how the reforms have opened up options for those with Defined Contribution (DC) pensions, there is still confusion among DB members about their choices. New LV= research has found that nearly half (45%) of over 55s with a DB pension don’t feel they have the necessary knowledge to make an informed decision about their retirement. In addition, three in ten (29%) are unlikely to seek advice, meaning much of the responsibility to educate members – and to ensure people can make safe, sustainable choices about their income – falls to scheme trustees.

Written by retirement expert Billy Burrows, ‘Wake up to freedoms: How to achieve good member outcomes’ is the first in a series designed to challenge the current viewpoints on retirement and DB schemes. This paper aims to help scheme trustees understand the challenges and opportunities of the new retirement landscape, while making the case for providing better information so members can fully understand their options.

For the vast majority of people staying in their DB scheme will be the best choice, but there will be some members who would benefit from transferring out. Current low gilt yields and low interest rates mean that people could get a very favourable amount for transferring their benefits and this, coupled with the change in death benefits, could make moving to a DC scheme appealing for many. It is therefore vital that trustees are transparent with scheme members about all their options.

Many pension professionals will be inclined to favour the security of guaranteed income over the new options, but retirement is a personal choice and the pension freedoms were designed to give everyone flexibility and control, where appropriate.

The full report can be found here and provides trustees with information on how retirement is changing, who may benefit from a transfer, and how to support members.

Steve Lewis, Head of Distribution, LV= Retirement Solutions, said: “The pension landscape has changed dramatically following the Freedom and Choice reforms and DB transfers are becoming increasingly popular. We believe that advice is crucial to help consumers get the best outcomes but each week thousands of people are retiring without support.

“Trustees have a key role to play in providing transparent information to scheme members about their options but we know that many DB members don’t currently feel they have enough knowledge. Most people are frightened of pensions, and have little idea of the options available to them. If members feel ill-informed, this could leave trustees exposed to litigation in future. Through LV=’s Corporate Solutions offering we want to help the industry wake up to the pension freedoms and ensure members have the support they need to make the best decision.”

Billy Burrows, Director of Retirement Intelligence added: “The initial focus for Freedom and Choice was to provide flexibility and control to DC pensions, but now we need to ensure that DB scheme members are equally well-informed about the reforms and can make the best long term decision for them. With a significant increase in transfer requests recently, it’s vital trustees provide information and support to their members to ensure they make the right choice at retirement.”


For further information please contact:

Robyn Margetts, Robyn.Margetts@lv.com , 0207 634 4418/ 073420 56747


Notes to editors:

¹. Research conducted by YouGov found LV= in the top position on the BrandIndex Recommend measure when assessing the data collected between 1st November 2015 and 31st October 2016. All data was collected using an online survey and respondents are members of the YouGov panel. The 30,435 strong research sample for this study was sampled and weighted to a UK nationally representative 18+ adult profile. The Recommend metric measures a consumer’s willingness to recommend a brand.

At the 2016 Moneywise Awards, LV= was named the UK’s Most Trusted Insurer.

Methodology:

LV= DB-DC research among 1,004 UK adults aged 55+, who have a defined benefit / final salary pension and have not yet started taking income from this pension yet, conducted online by Opinium from 28th September to 7th Oct 2016 .


About LV=:

LV= employs over 6,000 people and serves over 5.8 million customers with a range of financial products. We are the UK’s largest friendly society and a leading financial mutual.

When we started in 1843 our goal was to give financial security to more than just a privileged few and for many decades we were most commonly associated with providing a method of saving to people of modest means. Today we follow a similar purpose, helping people to protect and provide for the things they love, although on a much larger scale and through a wide range of financial services including insurance, investment and retirement products. We are currently the UK’s number one brand for Insurance and Investments, according to the 2015 YouGov Brand Index Buzz Rankings.

We offer our services direct to consumers, as well as through IFAs and brokers, and through strategic partnerships with organisations including ASDA and Nationwide Building Society.

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