A record £10.6 billion in pension transfers was recorded in the first quarter of 2018 according to the Office of National Statistics (ONS).
This compares with £2.4 billion in transfers lodged in the whole of 2016, one year after the pension freedoms were introduced.
Those leaving defined benefit schemes in favour of more modern and flexible defined contribution plans are thought to make up the majority of the transfers.
Tom Selby of AJ Bell says:
"We have witnessed a perfect storm for DB transfers in the UK, with a combination of the attractiveness of the pension freedoms, high transfer values and headlines about high-profile companies – most notably BHS and Carillion – going bust all undoubtedly influencing people’s decision to exit."
Those who have decided to abandon the security of a defined benefit scheme "will now need to take a much more active role to ensure they get the retirement they want".
The volume of transfers is expected to drop as the majority of defined benefit to defined contribution transfers complete.
It's not just the fact that a guaranteed pension is more secure than investing in the markets, there are additional risks such as unscrupulous advisers and fraudsters.
A recent report by Prudential showed that 20% of advisers believe that the threat of scams to be a major factor in clients wishing to avoid transferring their pensions, with the same amount also suggesting downturns in the market as a significant concern.
Vince Smith-Hughes of Prudential comments:
"Fear of falling victim to pension fraudsters is a major issue for retired people. Savers are having to take greater responsibility for ensuring their retirement funds last the rest of their life, and there is a risk they pick the wrong type of investments or fall foul of fraudsters who promise a high level of returns."
Therefore, he argues:
"High-quality financial advice is good value for money. It will provide people with a financial plan for retirement, help them select the right type of retirement plan, and also avoid fraudsters and inappropriate investments."
Your Financial Adviser can construct a financial plan for you that will enable you to meet your financial goals.
The value of investments and income from them may go down as well as up and you may not get back the original amount invested.
A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.
Pension transfers hit a new record