Mark Tinsley, Associate at Barnett Waddingham, said: “Whilst the number of transfer quotes requested by members has been volatile over the last 12 months, the number of CETVs actually paid out on behalf of members has remained remarkably steady. Given the vast majority of these members will have had to take financial advice this is slightly surprising given the well-publicised ban on contingent charging from October 2020 and the reduction in the number of firms now prepared to give DB transfer advice, which does not seem to be adversely impacting members’ willingness and ability to transfer.
“Taken together, the sharp increase in transfer quote activity and the persistence in the volume of CETV payments, this suggests that the pandemic may have created a pent-up demand for members to consider their options, possibly in light of emerging financial pressures. This means that now is a good time for trustees and sponsors to review what support they provide to their members.
“Relatedly, trustees should also start to consider how to implement the new powers to be given to them to stop a DB transfer where it has characteristics of a pension scam. With some cases likely to require an element of subjective judgment, which is potentially time-consuming, a pro-active approach to directing members to reputable sources of transfer advice could help minimise the additional administrative burden this may impose.
“Similarly, we have also seen a noticeable pick-up in bulk transfer exercises coming to the market in recent months – in fact, the quarter to 30 June 2021 was the busiest on our records that go back to the start of 2019. With part of this likely to be due to exercises put on hold in 2020 now coming to the market, this suggests that many trustees and sponsors are adding bulk transfer exercises back into their de-risking ‘toolkit’. Schemes that are yet to act in this area should consider how transfer exercises can again form part of a longer-term de-risking strategy, whether to partner with a high quality IFA firm on an ongoing basis and whether to review the CETV terms to ensure transfer values remain set at appropriate levels.”
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