The total fees paid by members transferring their defined benefit (DB) pensions increased by 10 per cent over the past year, from 1.7 per cent per annum (pa) to 1.9 per cent pa, according to the XPS Pensions Group’s annual member outcomes survey.

This is the highest rate seen since the survey began in 2018, with the increase in fees, which include charges associated with the financial products that members transfer into and for ongoing financial advice, seen alongside a "considerable" increase in average transfer values.

In particular, the survey showed that while fewer members had transferred over the year to 31 March 2021, recording a 23 per cent year-on-year fall, the average transfer value paid increased by 29 per cent to £375,000, “significantly more” than the average house price.

XPS Pensions clarified, however, that in the context of higher average transfer values, the increase in fees could also be driven by members choosing more “sophisticated” options, although 99 per cent of members over the past year transferred to a self-invested personal pension.

Considering this, XPS warned that some vehicles that could reduce cost, such as workplace pension schemes or master trusts, are not routinely considered by members.

It also suggested that if schemes combine access to financial advice and lower cost options, this could help the average member’s funds last around ten years longer in retirement.

XPS head of member options, Mark Barlow, commented: “The slowdown in transfer activity over the last 12 months is unsurprising since most of the year was spent in lockdown. Interestingly, it’s been those with the largest values who have continued to transfer.

"This, together with the reduction in choice for members transferring, may explain why average charges have increased by 10 per cent since last year.

“We’ve been encouraged to see trustees and employers step up support, with 50 per cent of members of schemes we work with now having access to enhanced support, up from 31 per cent last year.

"However, the pent-up demand from fewer transfers and retirements means there’s likely to be an increase in members considering their options soon.

"As a result, it’s as important as ever that trustees and employers take steps to improve the support they provide and ensure the best outcome possible for their members.”

In addition to the increase in fees, the survey showed that the gender transfer value gap had reduced from 50 per cent to 21 per cent, with the average transfer value for men sitting at £394,000 and women at £326,000.

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