The huge risks of getting out of a Defined Benefit pension scheme (by those who did) - Financial Times
This is what has happened to people who were induced to opt out of Defined Benefit on an individual basis (as distinct from being kicked out by the UUK + the USS chair). Everyone being kicked out of the USS Defined Benefits pensions will be in a similar boat:
The Financial Times has uncovered early signs of potential major problems with the operation of the UK’s new pension freedoms. While the Financial Conduct Authority has forced a number of firms advising on transfers to suspend their activities, the FT is also aware that the regulator is looking into reports that members of final salary schemes are being targeted by advisers, using high-pressure tactics to drum up business.
To take advantage of the reform, an individual must convert their defined benefit, or final salary, pension rights to a lump sum, then transfer this to a personal, or defined contribution, pension.
There are circumstances where this makes sense: when a person is in poor health or has no spouse or dependants. But the FCA believes that most people are better off in their “Rolls-Royce” final salary pensions because of the benefits of a secure, indexed income.
Transferring introduces important risks for individuals, who will either be responsible for managing large investment portfolios themselves, or paying someone to do it for them. And there are now signs emerging that the surge in people opting to trade their pension for a lump sum could lead to a fresh mis-selling scandal in the UK retirement income market. The last one, in the 1980s, led to £13bn in compensation payments to pensioners who had been advised to take out personal plans when they would have been better off remaining in a company scheme.