The number of quotation requests for defined benefit (DB) transfers and the value of payments made have fallen in the third quarter of 2018, in a sign the transfer fever is beginning to subside.
According to consultancy firm LCP, the rate of quotation requests fell from 1.7 per cent in the second quarter of 2018 to 1.6 per cent of deferred members in the third. This compares to a rate of 1.9 per cent in the third quarter of last year.
However, the figure is still almost three times the level it was in 2014 before the introduction of the pension freedoms.
The number of payments in respect of quotations given in the first three months of 2018 (the latest quarter for which all transfers have now been paid out) was 46 per 10,000 members.
This was the lowest payment rate since the third quarter of 2016 and was significantly lower than the all-time high of 66 payments per 10,000 members in the third quarter of 2017, LCP said.
Earlier this year, the Financial Conduct Authority disclosed that the value of money transferred from DB to defined contribution schemes had leapt to £20.8bn in 2017 from £7.9bn in 2016.
However, new rules for advice in this sector introduced by the FCA in October – such as the introduction of a transfer value comparator (TVC) - is expected to stop some savers from cashing in their pensions.
According to LCP’s research, about a quarter of the schemes surveyed included an estimated transfer value in the retirement packs provided to members.
In these schemes some 16 per cent of members aged 55+ had requested transfer values between April 2017 and March 2018, compared with 12 per cent of individuals in other DB pension funds.
Furthermore, 44 per cent of these quotes were paid, compared with 33 per cent in other schemes.
In the year up to the end of September 2018, LCP’s administration teams provided transfer value quotations to 7 per cent of deferred members with a value of £670m in total.
The total amounts quoted quarterly decreased over the course of 2018 compared with the record level of activity in 2017. But they remained significantly higher than in 2014.
More than £56m was paid out for quotes provided in the first quarter of the year with an average size of £389,000; this compared with the peak for quotes provided in the same period in 2017 when £92m was paid out with an average size of £627,000.
Craig Harrison, managing director of Creative Wealth Management, said his experience also showed a slowdown in DB transfers.
He said: "This may be down to a number of reasons including the well-publicised issues with British Steel, the regulators' activity in the market, and potentially reductions in transfer values depending on the scheme."