Defined benefit (DB) pension transfer redress payments continued to fall in the fourth quarter of 2024, with a typical complainant likely to receive no compensation, according to Broadstone’s DB Redress Tracker.

The tracker showed that rising gilt yields and asset values drove a “significant” decline in redress for a typical DB transfer complainant, and in many, or even most, cases, there may not be any redress payable.

The trend of decline continued at pace in 2024, according to the tracker, and further accelerated in the fourth quarter of 2024 as gilt yields rose markedly.

This decreased the assessed value of the transferred DB liabilities while asset values rose further.

With financial conditions softening and rates rising, the tracker revealed a “radical” decline in potential DB redress from the start of 2022, when the average compensation for a typical complainant was above £150,000.

“The changing economic environment has driven a sea-change in DB transfer redress, primarily due to the influence of increasing gilt yields,” Broadstone head of redress solutions, Brian Nimmo, said.

“There will now be many cases where no loss is experienced for those transferring out of their DB pension due to effective investment performance and the size of the original transfer value.

“However, it is also true that many individuals still face losses requiring redress and, with the potential requirements of CP23/24 coming down the line, it is important that financial advisers are preparing appropriately.

“This is likely to require expert, specialist advice and actuarial support to help them scope out how much capital is needed to be set aside for possible claims.”

Broadstone’s DB Redress Tracker provides an indicator of the level of compensation due to those who were previously ill-advised to transfer out of their DB pension, following an example of an individual who left their scheme in 2018 aged 50, with a pension of £10,000 per annum, which would receive inflation-linked increases when in payment.

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