Many £billions have been transferred from ‘defined benefit’ or final salary pensions to personal pensions since the introduction of George Osborne’s “Pension Freedoms “ in 2015. These allowed pretty much unlimited amounts to be drawn from personal pensions, and those old pension schemes, many struggling to meet their liabilities and almost without exception closed to new members, were happy to get those remaining off their books. The amounts offered as transfer values were eye-watering, life-changing for many; and some unscrupulous advisers took advantage the regulator stepped in a couple of years ago. It’s not, however, the extra rules and regs, and big compensation if it goes wrong, which has ended the boom, but what we can now call The Truss Effect. Years of low interest rates had meant that pension schemes, when looking at how much they needed to keep in reserve, mostly in government bonds, to cover their liabilities, could offer those big transfer values to cut their losses. Higher interest rates mean they need less in reserve to pay the same pensions, so those values have plummeted by many thousands in the space of a year. So for most, I’m afraid, the pension transfer boat has sailed.
“Why you should never retire”
On my 50th birthday, I will always remember, amongst the card or two I received was a letter from Saga’ who’d managed to find out my age through the wonder of the internet, and were pleased to tell me I now qualified to join my parents and go on holiday with them.
