Member interest in defined benefit (DB) scheme transfers is at its lowest level since early 2014, according to analysis from LCP.

The pension consultancy said that, having already dropped by 18 per cent in 2019 compared to the year before, volumes of requests for transfer value quotations had fallen further in the first quarter of 2020, particularly since the coronavirus lockdown began.

Using information from around 80 DB pension schemes that it administers, LCP noted that transfer value requests have steadily declined from above 50 in the first week of January to just 10 in the week ended 6 April.

The company’s research said explanations for this decline included members having more pressing matters to deal with during lockdown, confidence in DB pensions in light of recent stock market activity and disruption to the work of IFAs who might have otherwise been leading enquiries about transfer values.

Some schemes have also opted to pause providing transfer value quotations due to market volatility, which is likely to also account for some of the reduction in transfer activity.

LCP’s analysis did highlight that there were a few schemes where the pace of requests has held up or even increased, with these schemes apparently associated with situations where there may be member concern about the financial strength of the employer.

LCP partner, Bart Huby, said: “Regulators are understandably concerned about the risk of people under financial pressure transferring money out of their pensions and being exposed to scams. But our data suggests that in the short term there has been a sharp drop in the number of people asking for information about transferring out of their salary-related company pension.

“This could reflect nervousness about market conditions or simply the fact that people have other things to focus on at the moment.

"What is not yet clear is whether transfer volumes will bounce back later in the year as schemes relax temporary restrictions on processing transfers and more members decide that they need to access their pensions to meet financial pressures.”

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