06 February 2007
A prominent pensions expert has expressed serious concerns over
companies which are offering cash for employees to leave final
salary schemes and put money in a private pension instead.
Companies with big deficits in their pension funds have started
to adopt the practice in order to reduce their liabilities.
Members can be offered thousands of pounds in cash but in return
they lose a pension entitlement based on their final salary.
Malcolm McLean, chief executive of the Pensions Advisory
Service, says transferring out is highly unlikely to be in the
member's long term interests:
"My concern would be when an individual is moving their pension
benefits from a final salary scheme to a personal pension and
they're not sure what they're going to get out of it. This could be
the next big mis-selling scandal."
