The pension transfer market maintained its level of performance in Q2 2020 – the heart of the lockdown period – showing continued market resilience, according to Origo.
Data from Origo’s transfer index (OTI), which measures the average time taken to cede a pension from one provider to another, found transfer times increased only marginally for the year to the end of Q2 2020.
Origo’s data for the 12 months to the end of March found the average ceding transfer time was 8.8 calendar days. For the year end of June 2020, this increased to 9.4 days.
For simpler cases, the 12 month average to 31 March was seven days, and to the end of June 2020 was 7.3 days.
Origo managing director Anthony Rafferty said the imposition of lockdown in the UK inevitably disrupted pension providers’ usual processes, which in turn impacted the transfer market. However, it was quickly “business as usual” as the market adjusted to the new environment.
He continued: “The ability of the industry to maintain transfer performance is due to the effective response of providers and financial advice firms to the crisis, and the automation of the transfer process through the Origo transfer service, which has enabled transfers to be carried out as quickly and efficiently as possible despite the dramatic effects of lockdown on companies across the UK.
“Assuming lockdown restrictions will continue to be eased over the next few months, we anticipate that overall the transfer market will remain robust in 2020.”
Colin Campbell, who is chair of the Origo Transfer Service Steering Group, added: “The fact that during this unprecedented period for the industry, transfer times have been kept to little more than half-a-day of the average before lockdown, is testament to the efficiency of providers’ systems and operations and the Origo transfer service.”
The Origo transfer index collects data from more than 100 brands, including Aegon, Hargreaves Lansdown, Royal London and Standard Life.
DB transfer values rising
Meanwhile, data from pensions consultancy XPS Pensions Group’s transfer value index found defined benefit (DB) transfer values increased to a record high during June, with the average transfer value rising from £258,600 at the end of May to £260,800 in mid-June.
XPS’s index tracks the transfer value that would be provided by a hypothetical DB scheme to a member aged 64 who is entitled to a pension of £10,000 each year, starting at age 65. It increases each year in line with inflation.
Elsewhere, the group found DB transfer activity rebounded strongly last month, with the number of completed transfers increasing to an annual equivalent of 1.05% of eligible members – the highest rate seen since March 2019.
XPS Pensions Group head of member options Helen Ross said: “The increase in transfer activity during June is possibly the market catching up following low activity levels since lockdown, due to members hesitating over such big decisions or pension schemes temporarily suspending transfers. However, transfer quotation requests have also increased recently, meaning that we could see this trend continue in the short term.”