DB transfer market shows signs of recovery

Analysis from consultancy LCP, published on Tuesday, showed a drop in the number of DB transfer requests at the end of March when the nationwide lockdown took hold, but recent data for this month revealed a slow uptick in the number of inquiries.

Last week, the 81 DB schemes administered by LCP received 34 transfer requests. This compares with an average of 21 requests a week between the lockdown announcement on March 23 and the initial lifting of restrictions announced on May 10.

But the company stated that while there are signs activity is increasing, the current number of requests is still significantly below the average of 48 a week received in the 11 weeks before the lockdown announcement.

However, LCP said it is likely that demand will grow over the coming months, as financial pressures caused by the pandemic will lead more over-55s to seek access to their funds.

Looking at volumes of transfer requests on a weekly basis since the start of 2020, the consultancy found that initial fears of a surge in transfer activity due to people being targeted by scams had not materialised, although it cautioned this did not mean individual schemes had not been targeted.

The first quarter of 2020 had seen a relatively high volume of DB transfer inquiries, up 20 per cent on the previous quarter. 

Bart Huby, partner at LCP, said: “We have seen the beginnings of a ‘u’ shape of activity around DB transfer inquiries so far this year.

“After a busy first quarter there was a clear ‘lockdown effect’ as interest in potential transfers dropped sharply. But in more recent weeks there are signs of a recovery in interest in transfers.  

“It is possible that we may see a much higher level of inquiries later in the year as household budgets come under greater pressure, and the Pensions Regulator has warned trustees that they need to watch out for unusual or concerning patterns of transfer activity.”

This article originally appeared on ftadviser.com