Pension Transfer Frenzy Cooling

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Pension fever is cooling as fewer workers request transfer amounts from providers and the shine goes from golden goodbyes as companies offer to less to departing savers.

Experts monitoring the market insist the rush to shift pensions away from workplace defined benefit schemes is falling but is still three times the level reached in 2014.

Transfer quote requests reached 1.6% of deferred members in the third quarter of 2018, compared to 1.7% in the second quarter and 1.9% in the last three months of 2017.

Consultancy LCP says 46 from every 10,000 savers who asked for a transfer value went on to move their pension in the first three months of this year – the latest period for which figures are available.

Transfers hit £20 billion

This is the lowest rate since the third quarter of 2016 and much lower than the peak of 66 payments per 10,000 members in the third quarter of 2017.

LCP also explained around one in four companies offers estimated fund values when sending retirement packs to members.

Research found 16% of over 55s receiving retirement packs requested transfer values in the year ending March 2018 with a 44% take up, compared to 12% in other schemes, which had a 33% take up.

Regulator the Financial Conduct Authority says transfers hit £20.8 billion last year, rising from £7.9 billion the year before.

Transfer values up

Another market monitor, XPS Pensions, noted average DB pension transfer values in October ended at £235,000 after dropping as low as £230,000.

Sankar Mahalingham, Head of DB Growth, XPS Pensions Group said: “The increase in transfer values over October 2018 was due to both a drop in gilt yields and an increase in inflation over the month.  This is the biggest monthly change for over a year; in fact the fluctuation in October is almost as much as that for the year to September 2018.

“We mentioned last month that it was possible there would be a return to volatility as we approach the deadline for agreeing a deal for Britain leaving the European Union and continued speculation about the type of deal negotiated, all of which may impact gilt yield and inflation expectations.”

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