Denton said the rate of transfers is already “not in keeping with what politicians thought would happen under pensions freedoms…, which they predicted would be extremely low”.
However, citing a Freedom of Information (FoI) request released by the FCA, he said £20bn ($26.8bn €22.8bn) of pensions funds transferred in the year ending December 2017 up from £7.9bn the year before.
He said of all savers eligible to transfer, 7.7% had asked for a valuation which on average valued their pension at £335,000.
"This will remain great business for great advisers.”
Decade of growth
Of those 28% actually transferred with an average payout of three times the value of an average British home (£675,000) which means that 2% of all savers eligible to transfer had transferred.
Extrapolating, Old Mutual estimates 25 to 30% of all people, who are eligible to transfer, will transfer from defined benefit schemes in 10 years’ time.
Working with the Chartered Institute of Insurance, Denton said Old Mutual had trained 860 UK-based pension transfers specialists and developed a best practice guide to meet the growing demand.
According to the FCA data, about £5.5bn of pension funds was transferred out of defined benefit plans in the fourth quarter of 2017, compared with £2.5bn in the same period the year before.
In total, 92,000 transfers from defined benefit to defined contribution schemes were reported last year — a 50% increase on the 61,000 reported the year before.
Denton concluded: “If pension freedoms remain, which is not a given with increasing cost of professional indemnity insurance, and the statutory right to transfer remains, which itself is not a given, this will remain great business for great advisers.”