The Origo Transfer Service has reported the number of small pot transfers increase by over 40% in the past two years.
The fintech says that with the vast majority of the industry’s defined contribution pension transfers in the UK market being made through the Transfer Service, the data is a reliable measurement of activity in the market.
The Service reports the number of sub £10,000 pension pots transfers grew “significantly” between 2020 and 2022, increasing by 42%, while the number of pots under £1,000 also was up by 32%.
In the same time period the number of pots transferred which were under £30,000, the threshold beyond which an individual must seek financial advice before a transfer can be made, rose by 39%.
The overall number of transfers – across all pot sizes – increase 34% in the same period.
The top three ages at which pension transfers occurred were, in order, 55, 56, and 60.
The average transfer values for pensions accessed by those aged 31 to 45 were all under £30,000.
The top three ages at which pension to annuity transfers occurred were, in order, 65, 66 and 60. Average values for these transfers were all in excess of £30,000.
Commenting on the data, Anthony Rafferty, CEO Origo, says: “As the figures above show, the percentage rise in the number small pot transfers through the Origo Transfer Service is marked and over and above the total rise in transfers undertaken by the service since 2020.
“Market performance will have affected pension pot sizes but, while Origo data does not show the reason for a transfer, it would not be unreasonable to suggest that the economic situation in the UK has been playing into whether and when some consumers are accessing their pensions.”
“Consumers accessing their pensions as short-term fixes to the cost of living crisis is a concern for the industry, as when inflation subsides, they could potentially have damaged their long term and retirement saving as a result.”
