24 July 2019

Pension transfers pass £60 billion mark as third of a million use pension freedoms to move DB pots

7 min read

 
Steve Webb - Director of Policy

Steve Webb

Director of Policy, Royal London

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Information from Defined Benefit pension schemes suggests that well over a third of a million people have transferred over £60 billion out of such schemes in the last three years, according to an FOI reply obtained by Steve Webb, Director of Policy at Royal London.

Royal London asked the Pensions Regulator to update previous estimates of the volume of DB transfers and the latest figure suggests that 210,000 transfers worth £34 billion were reported to TPR in 2018/19.

Reporting year Number of transfers Value of transfers
2016/17 80,000 £12 bn (est)
2017/18 100,000 £14 bn
2018/19 210,000 £34 bn
Total 390,000 £60 bn

Sources: 2017/18 and 2018/19 figures confirmed in new FOI supplied to Royal London. 2016/17 volume figure from FOI on TPR website. Value figure for 2016/17 estimated on basis of average transfer value of approx. £150k across 2017/18 and 2018/19 data.

Commenting, Steve Webb, Director of Policy at Royal London said:

“These figures show the continuing huge interest in using pension freedoms to access pension rights in a more flexible way. Although the volume of transfers has probably passed its peak, large numbers of people are still interested in seeing whether reshaping their pension benefits would be in their interests. It remains the case that staying in a DB scheme will be the right answer for most people, but there may be individual reasons why a different combination of pensions would give a better outcome. In such cases it is vital that there continues to be a supply of impartial and expert financial advice for those considering making such a big decision”.

Notes to editors:

1. The data reflects DB scheme annual reports supplied to TPR over the 12 month period in question.  Most of the 2018/19 data therefore relates to transfers in the 12 months to 31st December 2017 or 31st March 2018.  It follows that the total number of transfers which has been undertaken to date will be significantly higher than the figures shown in the Table.

2. Data includes all transfers out of DB schemes and may therefore include a limited number of transfers from one DB scheme to another, rather than DB to DC transfers.

3. Full FOI reply as below:

“Dear Mr Webb,

Freedom of Information Act 2000 (FoIA) – request for information.

Thank you for your request for information dated 8 May 2019 which I have dealt with under the terms of the FoIA.

You have requested the following information:

“This time last year you kindly replied to my FOI request (FOI-2927) asking for 2017/18 data on the volume of transfers out of DB pension schemes. You kindly supplied figures for the estimated number of transfers and the value of those transfers.

I would be most grateful if you could supply the equivalent data for 2018/19 under the terms of the FOI Act. I would also be grateful if you were able to provide your latest estimate of 2017/18 data on the same basis.”

I can confirm that we hold information falling within scope of your request. 

Information we are able to supply

For the 2018-9 scheme submission period, we estimate approximately 210,000 individual transfers from DB schemes. This is not specifically DB to a DC transfers. The total value of those transfers is estimated at approximately £34 billion. This compares to similar estimates of 100,000 transfers with a total value of £14.3 billion for the 2017-8 scheme submission period.

These are estimates as not all schemes reporting that transfers took place have reported exactly how many transfers they carried out or transfer values.

Please also note that the data reported relate to transfers in the 12-month period covered by the reporting schemes’ most recent annual report and accounts relative to the effective date of the schemes’ submission of information to TPR.

Technical note

  • The source of our data are the Annual DB Scheme Return.
  • We ask schemes to tell us the number and value of transfers as at the last reporting date (ie usually the latest reported annual scheme accounts). 
  • The nature of the process therefore means that there is a time lag in the figures as they relate to the 12 months up to the scheme year end of the most recent report and accounts produced prior to the effective date of the scheme return submission.
  • Around 96% of the returns relate to the 12-month period up to scheme year endings between April 2017 to February 2019 i.e. they can relate to transfers that go back as far as March 2016. Over 50% have year-end dates of either 31 December 2017 or 31 March 2018.
  • Where data on members transferring or values of transfer are missing we have sought to model and impute missing values.
  • While the raw data were reviewed for potentially erroneous entries it is possible that some erroneous entries (e.g. buy-in / bulk transfers) have not been identified and are included in the reporting.

For further information please contact:

Steve Webb, Director of Policy, Royal London

About Royal London

Royal London is the largest mutual life, pensions and investment company in the UK, with funds under management of £130 billion, 8.8 million policies in force and 4,046 employees. Figures quoted are as at June 2019.

At Royal London, we’re proud to champion the value of impartial advice. We believe it plays a crucial role in connecting people with the products that are right for them – and is key to delivering better outcomes and experiences for our customers. At the same time, it helps to build trust in our products and services.

Royal London works alongside advisers not in competition with them. That’s why we’ve made some key commitments to the intermediary market. You’ll find more detail on our commitment to advisers at http://adviser.royallondon.com/campaigns/our-commitments/