LCP’s analysis of the market in 2020 highlights that the two months with the lowest number of requests (April and May) coincided with the toughest restrictions, while in contrast the two months with the highest number of requests (January and February) came before Covid-19 hit the UK. Across the rest of the year, only August and December – which typically see reduced levels of activity around the holiday periods – saw fewer requests than the other month of lockdown, November.
Other trends picked up by LCP are:
In the first 3 weeks of December, the 83 DB pension schemes administered by LCP received an average of 31 transfer requests per week, compared with the average of 30 transfer requests per week received in Lockdown 2 in November 2020, and 21 per week during the seven weeks of the first lockdown in the Spring.
In comparison, across the schemes administered by LCP, there was an average of 49 requests per week between 6 January 2020 and 15 March 2020 before the first lockdown hit.
Generally during 2020 transfer request activity dropped significantly below “normal” levels during periods of heightened Covid-19 restrictions, especially during the first national lockdown in the Spring.
The trend between lockdown periods and transfer activity may be linked to members prioritising other concerns during these periods, or placing a higher relative value on the security of a DB pensions during times of general uncertainty. During the first lockdown, members of some schemes may also have delayed submitting requests where the schemes temporarily suspended processing quotations.
Bart Huby, Partner at LCP, commented: “2020 shows us there is a strong correlation between lockdowns and dips in DB transfer activity levels. As a result, we expect activity to remain subdued during the first quarter of this year. However, in Q2 a combination of greater financial pressure on households as furlough schemes end and a lifting of lockdown measures as vaccination coverage increases could combine to give a significant lift to transfer activity. If this happens, some schemes may need to be ready for a potential tsunami of requests.”
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