Total value of pension transfers falls
1 October 2018
The total value of pension transfers fell for the first time in two years during the second quarter of 2018, official data has shown.
The total value dipped to £8.2 billion in the three months to June 2018, down from £10.6 billion in the first quarter, according to the Office for National Statistics.
In 2017, £36.8 billion was transferred out of pension schemes. Since the pension freedoms were introduced in April 2015, the ONS has recorded a total of almost £80 billion of pension transfers.
Tom Selby, senior analyst at AJ Bell, said: “Savers have been rushing to the defined benefit exit door in their droves since the pension freedoms were introduced, attracted by a combination of alluring transfer values and the flexibility on offer in defined contribution schemes.
“While there are circumstances where a DB transfer can be in a saver’s best interests, the FCA has been turning up the heat on advisers acting in this market. There have also been reports of insurers jacking up premiums where advisers are carrying out this work – a pincer movement which has unsurprisingly seen many advisers pull out of the market.”
According to Selby, with DB transfers requiring advice to be taken where the pension exceeds £30,000, this “supply constraint” could have the effect of lowering activity in the market.
He added: “You would also expect the number of people with significant funds that are eligible for a transfer slowly edge downwards over time, and we may now be seeing the start of that process.”
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