The defined benefit (DB) pension transfer market is expected to remain depressed until Q2 this year, when an easing of lockdown and the end of government support schemes could bring a "tsunami of requests", according to LCP research.

The firm's analysis of the 2020 market revealed that the two months with the lowest number of requests, April and May, coincided with the toughest restrictions, whilst those with the highest number of requests, January and February, predated the Covid-19 crisis in the UK.

Furthermore, only August and December, which LCP noted typically see reduced levels of activity due to holiday periods, saw fewer requests than during the second lockdown in November, when just 30 transfer requests were received per week.

The firm speculated that the trend between lockdowns and the subdued transfer market may be due to members prioritising other concerns during these periods, or placing a higher relative value on the security of DB pensions during times of general uncertainty.

Furthermore, it noted that some members may have also delayed submitting requests amid the first lockdown, as schemes temporarily suspended processing quotations amid regulatory easements,

Commenting on the findings, LCP partner, Bart Huby, said: “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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