Experts warn over pension exchanges

Retirees have been urged to carefully consider any pension exchange offers they receive from former employers.

A growing number of pensioners are being offered changes to their policy which may give them a higher pension in the short-term.

However, the offers, known as Pension Increase Exchanges, can lead to people giving up some or all of the pension increases they are due in the future.

Experts at KPMG said policyholders must take the time to carefully weigh up their options before accepting any such offers.

The group warned that people should consider their individual circumstances and investigate how any changes would affect their income in the future.

KPMG pensions partner Mike Smedley said: "When members retire from defined contribution plans and choose an annuity to buy, flat annuities are far more popular than index-linked ones.

"So it makes sense to provide defined benefit scheme members with similar flexibility and choice. But it's crucial that each individual is sure that they understand exactly what they have now and what their options are."

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