Defined benefit (DB) pension transfer take-up rates stood at 4 per cent in Q2 2023, LCP’s latest quarterly analysis has shown, the second lowest level since the analysis was introduced 10 years ago.

The low take-up rates were driven by the rise in gilt yields and subsequent fall in transfer values, according to the consultancy.

However, the 4 per cent take-up rate in Q2 2023 was a slight increase on the record low of 3 per cent observed in the first quarter of 2023.

The low take-up rates coincided with low transfer values, with the average transfer value paid for quotations provided in Q2 2023 being £198,000, the lowest since Q1 2014.

The total value for payments was £4m in Q2 2023. By comparison, the peak for transfer values was in Q1 2017, when £92m was paid out with an average size of £627,000.

Meanwhile, the average quoted transfer value in the fourth quarter of 2023 was £143,000, a new low since LCP started its analysis in 2014.

At LCP, it provided transfer value quotations to 3.8 per cent of deferred members in 2023, down from 4.2 per cent in 2022, and “significantly lower” than the 8 per cent peak in 2017.

Commenting on the findings, LCP associate consultant, Avneet Gill, said: “For many years, the average transfer value paid for a DB pension was around twice the size of the average UK house price.

“With the recent sharp falls in transfer values, for the first time in 10 years, the average transfer value paid out is now back to being broadly in line with the average UK house price.”

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