Compensation for a typical defined benefit (DB) pension transfer redress case continued to fall through Q1 2025, although these downward movements may be 'wiped out' by recent market volatility unless changes are seen, Broadstone's DB redress tracker has revealed.

The tracker showed that compensation for a typical pension transfer redress case dropped from around -£16,000 at the end of 2024 to around -£22,000 at the end of March.

However, additional modelling showed that the recent market volatility over the past week has reversed all of the downward movements recorded through Q1, with indicative compensation levels now back to around -£16,000.

If markets continue to fall, redress levels will likely continue trending upward in the second half of the year, Broadstone added.

With financial conditions softening and rates rising, the redress tracker demonstrated a "steep" decline in potential DB redress since the start of 2022, when average compensation for the use case was above £150,000.

However, Broadstone warned that individual redress levels are "highly volatile" and can vary widely based on factors like the initial generosity of transfer values or investment returns, which means redress is still payable in some cases.

Broadstone's head of redress solutions, Brian Nimmo, said that the current market volatility and personalised approach to calculating DB transfer redress highlighted the importance of treating claims on a case-by-case basis.

"The recent market turmoil has the potential to shift the redress landscape – what has been a consistently downward trend for the past three years now points towards the possibility of a reversal as we look towards Q3 2025," he continued.

"Moreover, while the average level of redress may have dipped in Q1 2025, we still see many cases where compensation is due – particularly where transfer values were low, or investment performance has been poor. This reinforces the importance of claimants and their advisers reviewing each case on its merits."

Nimmo claimed Broadstone was also continuing to assess redress in cases beyond pension transfers, such as mis-sold free-standing AVCs, where the compensation dynamics differ, with redress typically being paid in most of the cases.

"Market-wide trackers are useful for spotting broad trends, but they can sometimes gloss over the complexity of individual cases. With conditions shifting so rapidly, a deeper understanding of redress drivers is more important than ever," he added.

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