Cash equivalent transfer value (CETVs) requests are starting to return to pre-pandemic levels following a 50 per cent increase in quotations, research has found.
Barnett Waddingham’s analysis of CETVs to June 30 2021, published yesterday (August 24), found there has been a sharp increase in transfer quote requests, which the firm said suggests member interest in CETVs is returning to pre-pandemic levels.
Requests for quotations decreased between October 2020 and January 2021 and while this drop off was to be expected, it was more significant than in previous years due to national lockdowns.
Following the January low of about 40 weekly requests, the number of quotations increased significantly in the first quarter of 2021 and then remained at about 150-200 quotations per week throughout the second quarter of this year.
This is similar to levels seen in 2019 and early 2020, before the pandemic hit.
Mark Tinsley, associate at Barnett Waddingham, said while the number of transfer quotes requested by members has been volatile over the past year, the number of CETVs actually paid out on behalf of members has remained steady.
Tinsley said: “Given the vast majority of these members will have had to take financial advice this is slightly surprising given the well-publicised ban on contingent charging from October 2020 and the reduction in the number of firms now prepared to give DB transfer advice, which does not seem to be adversely impacting members’ willingness and ability to transfer.
“Taken together, the sharp increase in transfer quote activity and the persistence in the volume of CETV payments, this suggests that the pandemic may have created a pent-up demand for members to consider their options, possibly in light of emerging financial pressures. This means that now is a good time for trustees and sponsors to review what support they provide to their members.”
He added: “Relatedly, trustees should also start to consider how to implement the new powers to be given to them to stop a DB transfer where it has characteristics of a pension scam.
“With some cases likely to require an element of subjective judgment, which is potentially time-consuming, a pro-active approach to directing members to reputable sources of transfer advice could help minimise the additional administrative burden this may impose.”
Retirement guidance tool Guiide is launching an adviser signposting service for DB transfers in a move to put a halt to scams in this area.
The service aims to give members a feel for whether or not a DB transfer would be in their best interest without crossing the advice boundary.
If, after this, the saver decides to pursue DB transfer advice then the service signposts them directly to vetted specialist advisers offering abridged advice as a prerequisite.
For those who decide against a transfer the service will signpost them to a general retirement adviser, should they decide to seek advice on using the scheme benefits to provide a retirement income.