Investment firm Killik & Co has seen an increase in enquiries from its clients that are concerned about the stability of their workplace defined benefit (DB) schemes.

Due to the economic uncertainty brought about by the Covid-19 pandemic, concerns around the financial security of sponsoring employers has risen.

“A higher than usual amount of people have come to us asking about their DB pension because they are worried about the financial security of the employer that their workplace pension is wrapped up with, due to the economic impact of Covid-19,” said Killik & Co head of wealth planning, Svenja Keller.

“Some industries, such as travel, are quite hard hit and there may be long-lasting consequences for some big companies.

“Those with larger pension entitlements are understandably concerned about this – if their employer went bankrupt, the scheme may end up in the Pension Protection Fund (PPF), but in most cases benefits are capped and inflationary increases tend to be less generous.”

The uncertainty could result in more people considering taking action with their savings, but Killik & Co urged anyone considering a transfer or taking a lump sum to get advice before proceeding.

Keller warned that the decision is a “complicated process” that is “highly dependent” on the member and their pension.

“The big question is whether they should transfer out of the scheme and instead take a lump sum over the guaranteed income for life,” Keller added.

“As interest rates are still at record lows, the lump sum option may seem attractive as it could mean a larger transfer value.

“However, it’s crucial to get advice with a reputable firm – and getting advice is a requirement if the transfer value is over £30,000 or over.”

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