Cash equivalent transfer values (CETVs) were "significantly impacted" in a number of key areas by the Covid-19 pandemic, according to research by Barnett Waddingham.
Analysis from the consultancy published last week revealed the pandemic impacted CETVs over 12 months to 31 March 2021 in areas including on the number of quotes and exercise, on transfer value amounts, and on defined benefit (DB) transfer guidance.
The volumes of transfer quotes requested by members in schemes the firm administers dropped by 20% to 40% in each of the lockdowns, and was down by around 10% overall across the year.
Its research also found the number of large, one-off bulk exercises carried out by pension schemes reduced, with data showing two exercises of more than 1,000 lives coming to the market in the year to 31 March 2021, compared to 14 in the 12 months prior.
The firm said the ban on contingent charging and the reduction in the number of firms now prepared to give DB transfer advice may have contributed to the fall in demand.
Despite this, there was evidence of a "significant bounce-back" in transfer quote activity in February and March 2021, with CETV requests around 50% higher than seen on average in the previous ten months going back to the start of the pandemic.
"This potentially points to a pent-up demand for members to consider their options," the firm noted.
Barnett Waddingham's research also found during March and April 2020 a typical CETV amount "fluctuated significantly" in response to the high levels of market uncertainty.
It found a typical transfer value has fallen significantly during 2021 to the extent that "CETVs may now be lower than they were as at 31 March 2020, possibly by as much as 7% for a 60 year old member".
Barnett Waddingham said with many members facing challenging economic situations as a result of Covid-19, "trustees and sponsors need to consider whether they can provide members with additional support, as well as review any existing processes to make sure that they comply with the latest guidance".
Associate Mark Tinsley said: "Schemes that are yet to act in this area should review their options in advance of a possible uptick in member interest. This includes (re)considering the merits of a bulk exercise, partnering with a high quality independent financial adviser on an ongoing basis and reviewing the CETV terms.
"Trustees and sponsors need to remain alert to market volatility and the knock-on impact for members looking to transfer out. Ensuring that the CETV terms remain robust to changes in market conditions is key, as well as having processes in place to temporarily suspend transfer value quotations in the event of extreme market movements."
He added: "However, one area that does need looking at is members communications, or modelling tools, that provide illustrations of what members can do with a DB transfer value in a defined contribution scheme - specifically, drawdown or annuity purchase illustrations that use assumptions about the future (which will be the case for all drawdown illustrations).
"If benefit statements, retirement packs or other communications include these types of illustrations then these will need to be reviewed urgently to ensure that they are not crossing the line into regulated advice."
