Barnett Waddingham’s latest analysis of cash equivalent transfer values (CETVs) showed a decrease by around 30% over the 12 months to 31 March 2023. This is due to the significant increases in gilt yields seen over 2022 following the Bank of England’s decision to increase interest rates in response to high inflation.
Liam Mayne, Partner at Barnett Waddingham, said;“We have observed a 40% fall in transfer values paid out in the six months since September 2022, when the mini-budget was announced, compared to the six months beforehand. With market conditions seemingly more settled, now is a good time for trustees and sponsors to reflect on whether it would be beneficial to take actions to re-engage members with the transfer option.
“While transfers will not be the immediate priority for schemes seeking to buy out in the short-term, it is important to recognise the significant advantages to both members and sponsors of a well-designed transfer exercise for schemes in this situation. For members, this may be the last chance to access DC flexibilities on terms that are more favourable than those offered by insurers. For sponsors, a transfer exercise could reduce the cost of any buy-out payment.”