Following the introduction of ‘Freedom and Choice’ for defined contribution (DC) pensions in April 2015, we have seen increasing numbers of members transfer out of defined benefit (DB) schemes to access these new freedoms.
While these options could be attractive for some members, they represent important considerations for both trustees and companies alike:
- For trustees, considerations include how to support members to fully understand the options available, whether to increase the range of options available in the DB scheme itself and implications for a scheme’s investment strategy; and
- For corporate sponsors, a consideration may be using the new flexibilities as a way to manage risks in a scheme, reduce costs and bridge the gap to a possible future buyout.
Whether you are a trustee or a corporate sponsor, there is a range of issues to consider in relation to the new pension freedoms.