Defined benefit (DB) cash equivalent transfer values (CETV) stabilised over the past quarter, analysis from Barnett Waddingham has found, revealing a 30 per cent year-on-year fall in the average transfer value.

The research also highlighted a "sustained, significant fall" in the number of transfer in the number of transfer values paid out since the September 2022 mini-Budget, as transfer value activity continued to be “muted" in Q1 2023.

Yet while the number of payments remained at “very low levels” over Q1 2023, the research found that the number of transfer value quotations issued in Q1 2023 was significantly higher than Q4 2022.

Barnett Waddingham said that this was to be expected, however, as some schemes decided to suspend transfer value quotations amid the market volatility in Q4 2022.

Indeed, the research found that when looking at experience over Q1 over the past four years, the general trend appears to be a fall in the number of transfer quotations.

The report also revealed that Q1 2023 saw no new bulk transfer value exercises, marking lowest activity in any quarter since the analysis started in 2019, which Barnett Waddingham attributed to schemes focusing on buyout preparations following improved funding levels.

Unlike bulk exercises, the research found that there has still been demand for ‘business-as-usual’ exercises, although Q1 2023 again marked the lowest quarter since 2019, with three new exercises announced.

Commenting on the update, Barnett Waddingham partner, Liam Mayne, stated: “We have observed a 40 per cent 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.”

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