Private-sector defined benefit pension fund participants should have the same rights and flexibility as participants in defined contribution plans, according to a survey by Mercer.
The consultant polled more than 150 private-sector pension fund employers and trustees following the U.K. budget, in which Chancellor of the Exchequer George Osborne announced changes to the way DC participants could access their retirement savings.
Mercer said 65% of respondents think both DC and DB participants should be treated the same when it comes to retirement savings access.
One of the issues is around transferring DB assets to DC plans. The U.K. government is currently seeking comment on whether this transfer should be allowed to continue. According to Mercer, 78% of employers said DB participants should be allowed to transfer to gain the same flexibility as DC participants. The next most popular option was for transfers into DC to be allowed, but subject to the approval of trustees of the DB fund, with 10% of employers opting for this. However, 50% of trustees said they would prefer transfers to be permitted, followed by 23% who said transfers should be allowed subject to trustee approval. The practice was entirely opposed by 13% of trustees.
“Understandably, trustees might have concerns that allowing DB to DC transfers will have a negative impact on their schemes' funding levels,” said Matthew Demwell, partner at Mercer, in a news release. “However, we believe that transfers from DB to DC should continue to be permitted. They are a valuable tool to help trustees and sponsors manage DB risk by reducing liabilities and the financial uncertainty that goes with increasing life expectancy. Allowing transfers will also encourage positive attitudes to retirement provision among the public. It's also important to avoid creating an unnecessary and unfair discrepancy between the rights of DB and DC members.”