Pensions - Articles - Coronavirus accelerates decline in pension transfer activity

Analysis of data from company pension schemes by LCP has found that member interest in transfers out of Defined Benefit pension schemes is at its lowest level since early 2014, before the introduction of “freedom and choice”. Volumes of requests for transfer value quotations were already markedly down in 2019 compared with 2018, but the first quarter of 2020 has seen further declines, especially in recent weeks since the Covid-19 lockdown commenced.

 Based on a sample of around eighty DB pension schemes administered by LCP, the chart shows the weekly number of requests for DB transfer values. In January and February, a typical week saw 40-50 scheme members request a transfer value, but that number has been falling steadily since the start of March with volumes now down by more than three quarters.


 Possible explanations for the most recent decline in requests for transfer values include:
 The major disruptions to everyday life from the lockdown meaning that members have, at least temporarily, more pressing things to think about

 Members attaching more weight to the relative certainty of a Defined Benefit pension compared with a Defined Contribution pension, particularly in light of recent stock market slumps;

 Disruption to the work of IFAs which might have otherwise led to inquiries about transfer values

 A significant number of DB schemes have now decided to put a temporary hold on providing transfer quotations to allow market volatility to settle down and give time to review their transfer value calculation bases in light of the latest developments. This is likely to reduce overall transfer activity further for a period of time.

 However, there are a few schemes where, in stark contrast, the pace of requests has held up (and for some even increased a little).

 These appear to be associated with situations where there may be particular concern amongst members about the financial strength of the employer in this crisis. In these cases in particular scheme trustees and their administrators will need to watch out closely in the coming weeks for scammer activity.

 Commenting on the trends, Bart Huby, partner at LCP said: “Regulators are understandably concerned about the risk of people under financial pressure transferring money out of their pensions and being exposed to scams. But our data suggests that in the short term there has been a sharp drop in the number of people asking for information about transferring out of their salary-related company pension. This could reflect nervousness about market conditions or simply the fact that people have other things to focus on at the moment. What is not yet clear is whether transfer volumes will bounce back later in the year as schemes relax temporary restrictions on processing transfers and more members decide that they need to access their pensions to meet financial pressures”.

Back to Index

Similar News to this Story

Call to consider staggering requirements by size of scheme
XPS has responded to the DWP’s consultation on ‘Improving outcomes for members of defined contribution pension schemes’. It is calling for the governm
Comment on MaPS Pensions Dashboards Programme update
Commenting on the publication by the Money and Pensions Service (MaPS) of an update on the Pensions Dashboards Programme pathway, Anthony Rafferty, Ma
Employment crisis may be made worse by lack of training
The largest global retirement survey of its kind, carried out in 15 countries by Aegon, highlights a considerable training gap between older and young

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS


Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.