No. 1643 | The Voice of Financial Advisers

DB transfer values hike as execs turn to planning

by Amy Austin

Wealthy executives using the Covid-19 crisis to get to grips with their personal finances have helped trigger a spike in high-value defined benefit pension transfers, advisers have claimed. While overall DB transfer

activity has been hit by the pandemic, Dominic James Murray, independent financial adviser at advice firm Cameron James, said the company had experienced a notable uplift in large DB cash-equivalent transfer values for its clients, with some reaching £1m to £2m in value. The average transfer value at

the company now stands at £435,000, almost double the £243,000 valued before the Covid-19 crisis hit. Mr Murray said this was due to an increase in higher quality leads coming from directors and other senior managers. He said: “The uplift in higher

value CETVs could be correlated to senior executives having downtime working from home during Covid-19 and finally getting around to financial planning. “Due to Covid-19 and the

lockdown, these individuals may now have more hours in which they can use to look into things such as pensions and what they can do to better their position. Pre-lockdown they would not necessary allocate this period of time to financial planning.” A large advice network that

wished to remain anonymous said it had seen some bigger transfers take place, but acknowledged that values alone were not enough to warrant such decisions. “There are always some

outliers and so we have seen some larger transfer values – although this in itself does not justify a good reason to transfer,

Weak lockdown

10 20 30 40 50 60


Number of transfer requests Strict lockdown

Therefore they were keen to push the transfer through before the CETV expired.” Guidance from The Pensions

Regulator, published at the end of March, said trustees of DB schemes could choose to delay new member requests for transfer quotations by up to three months, a move which also likely encouraged individuals to push through their pre-existing CETV.

Source: LCP

it is just part of the equation,” a spokesperson for the network said.

Keith Richards, chief

executive of the Personal Finance Society, agreed it was likely that Covid-19 had caused many individuals to look at their finances when they may not have had the capacity or desire to do so before. Mr Richards said:

“Professional advisers, almost every day, deal with circumstances where individuals look to make decisions based on life experiences. This includes individuals who are reassessing their own priorities, needs and wants, having lost loved ones, good friends, colleagues and acquaintances. “Life-changing situations like

Covid-19 will understandably trigger financial planning considerations and questions, particularly as we grow older. “It is normal for people to consider whether they are getting their work/life balance right, and this is particularly true at the time of losing someone close to us.” Consultancy LCP said rises in

gilt prices had also helped transfer values during the Covid-19 lockdown and predicted more requests could follow.

Steven Taylor, partner at LCP,

said: “Significant recent falls in government bond yields have driven higher transfer value quotes for many scheme members. “Taking this and the wider economic backdrop into account, coming months could see new interest in transfers as part of wider financial planning. “However, now, even more

than in the past, it is key that transfer decisions are not taken lightly and benefit from robust IFA advice.”

Other trends in the DB market Cameron James told Financial Adviser it had also seen an increase in clients requesting DB transfer advice with very short CETV deadlines. Clients have been attempting

to lock in higher transfer values, offered pre-Covid-19 and prior to March’s market falls, rather than requesting a new CETV that would be lower in value. Mr Murray said: “We had

several individuals approach us with four weeks left on their CETV guarantee wanting to push forward with the transfer. “Because markets crashed and

in turn caused pension funds to drop, people were finding that they had a pension worth, for example, £400,000, but a CETV valuing it at £500,000.

Making a comeback The number of DB pension transfers across the market as a whole continues to fall, according to fellow consultancy XPS. Its latest data showed the number of completed transfers in April stood at its lowest level since at least June 2018. However, separate analysis

from fellow consultancy LCP showed transfer market beginning to recover in May. According to its data, the 81 DB schemes administered by LCP received 34 transfer requests in the week to May 22. This compared with an

average of 21 requests per week between the lockdown on March 23 and the gradual lifting of restrictions announced on May 10. But the company added that

while there were signs that an uptick had begun, the current number of requests was still significantly below the average of 48 per week received in the 11 weeks before the lockdown announcement. The PFS’s Mr Richards said:

“There may still be a further increase in individuals considering their retirement options as the economic issues arising during lockdown play out in real time, but advisers are best placed to help people make informed decisions, especially in difficult times.”




JUNE 04 2020






Property funds ‘long way’ from opening

Investors will face a long wait to access the £13bn of cash trapped inside UK property funds, experts have predicted. According to CBRE, there are

several things – many of which were “quite a long way off” – that need to happen before the surveying body would agree to lift the material valuation uncertainty clause from all sectors, which in turn would see property funds reopen. Nick Knight, head of UK

valuation at CBRE, said: “We need to see a more normal level of activity, so more transactions in the marketplace. Once activity starts to return, the clause will be lifted from that sector.” Rupert Johnson, global

head of valuation and advisory

at Knight Frank, said that “not many businesses” were “anywhere near back to normal” yet. The 11 UK property funds

available to retail investors, with £12.8bn of assets between them, were suspended in March as valuations became difficult during lockdown. IT

18/05/2020 11/05/2020 04/05/2020 27/04/2020 20/04/2020 13/04/2020 06/04/2020 30/03/2020 23/03/2020 16/03/2020 09/03/2020 02/03/2020 24/02/2020 17/02/2020 10/02/2020 03/02/2020 27/01/2020 20/01/2020 13/01/2020 06/01/2020 30/12/2019

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