DB transfer requests return to pre-pandemic levels

Barnett Waddingham’s analysis of CETVs in the 12 months to June 30 2021, published on Tuesday, found there has been a sharp increase in transfer quote requests, which the company said suggests member interest in transfers is returning to pre-pandemic levels.

Requests for quotations decreased between October 2020 and January 2021, and while this drop off was to be expected, it was more significant than in previous years due to national lockdowns.

Following the January low of about 40 weekly requests, the number of quotations increased significantly in the first quarter of 2021 and then remained at about 150-200 quotations a week throughout the second quarter of this year. 

This is similar to levels seen in 2019 and early 2020, before the pandemic hit.

Mark Tinsley, associate at Barnett Waddingham, noted that while the number of quotes requested by members has been volatile over the past year, the number of transfers actually paid out on behalf of members has remained steady. 

Tinsley said: “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.”

He added: “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.”

This article originally appeared on FTAdviser.com