The average size of a transfer from a defined benefit (DB) pension scheme in the last quarter reached £556,000, according to research by Lane Clark & Peacock (LCP).
According to the firm's research, this is the first time for three years that the average value has exceeded half a million pounds and is an increase of 30% compared with the previous quarter.
The record figures - based on analysis of more than 80 DB pension schemes administered by LCP - reflect a combination of continuing low interest rates and, according to the firm, possibly a wariness among those with small pensions to take on investment risk during this time of economic uncertainty.
Despite transfers breaking through the half-a-million-pound barrier, in the most recent quarter only around one in five of those who had received a transfer value quotation completed a transfer out, the lowest take-up rate since 2016.
LCP revealed this may in part reflect an unwillingness by individuals to make major financial decisions amid the Covid-19 lockdown period, as well as guidance from The Pensions Regulator which allowed schemes to take longer when processing pension transfers.
The firm's transfer analysis also revealed there was a sharp reduction in transfer quotation activity over March, April and May, with the rate of requests falling initially to well below 50% of pre-lockdown levels, and, while around 8% of members aged 55 and over requested a transfer quotation in the year to 30 June 2020, just 3% of members under 50 requested one.
LCP partner Bart Huby said: "It's no surprise that this quarter has seen such a dip in pension scheme members asking for quotations or taking up quotations they had already received, given that it coincided with the height of the pandemic. But it seems as though those with the largest pensions have been the least likely to be put off from completing a transfer.
"While the Covid-19 impact is ongoing, the transfer market is about to enter into very new territory as the Financial Conduct Authority's ban on ‘contingent charging' comes into effect in a few weeks. This could have a big impact on the number of quotations requested. It may also make it harder for members to get the right advice as we expect it will lead to many advisers leaving the market."
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