Britons taking their money out of final-salary schemes risk creating a “time bomb” of poverty later in retirement, writes Annabelle Williams for The Times.
Since so-called pension freedoms came in more than 200,000 people have transferred money out of their schemes, taking lump-sum payments.
“An exodus from final-salary, or defined-benefit (DB), pensions began in April 2015, when rules were relaxed to allow savers to dip into their defined contribution (DC). It means lump sums can be taken, from age 55, to pay off a mortgage, credit card, or just to spend,” she writes.
It’s estimated that 210,000 people “have since pulled a collective £50 billion from the company-sponsored schemes, according to Mercer,” continues Williams. Money transferred from DB plans is usually place in a DC scheme, allowing savers to withdraw funds under the new rules.
“There is evidence people are not heeding the advice they are given,” MP Frank Field, the chairman of the work and pensions committee, is quoted saying. “Some people are making very poor decisions, putting their retirement plans and financial security at risk and potentially falling back on the welfare safety net.”
More: Watchdog investigating possible pressure tactics.

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