The latest Retirement Income market update from the UK’s Financial Conduct Authority has revealed that the number of Defined Benefit (DB) transfers dropped in 2022/23 by nearly one third.
In total, there were 18,073 DB to Defined Contribution (DC) transfers, down 32% from 26,619 the previous year (2021/22) and a continued decline from the 30,596 in 2020/21.
The number of firms that received DB transfers has also trended downwards, falling from 120 to 116 between 2021/22 and 2022/23.
Brian Nimmo, head of redress solutions at actuarial consultancy and DB redress specialists OAC, said: “DB transfers have consistently continued to decline and the latest FCA data shows that trend continuing.
“Falling transfer values are likely to have accelerated that trend as pension savers increasingly see the risk in losing the value of the guarantees in a DB pension by transferring into a DC arrangement. A significant number of advisers have stopped advising on DB transfers too as they decide that increasing regulation makes it too risky for their business, and the FCA’s ‘polluter pays’ reforms may accelerate that trend.
“DB pensions offer huge security and peace of mind for pensioners in retirement in guaranteeing a certain level of income and so, while a transfer may be the right decision for a limited pool of pensioners, we would expect volumes to continue falling over the coming years.”
