Take-up rates of defined benefit (DB) pension transfers has fallen to a new all-time low, according to analysis from LCP.

The consultancy, which has surveyed the market since 2014, said the latest complete data from the first quarter of 2023 showed that only 3 per cent of quotations were taken up between January and March.

This latest fall continues an ongoing decline since 2017, according to LCP, when DB transfer rates were as high as 34 per cent of all quotations.

LCP believed the main reason for the fall in take-up rates was the rise in gilt yields and the subsequent fall in transfer values.

The average quotation size for the first quarter of 2023 was £189,000, the lowest figure since the third quarter of 2014.

In the second and third quarters of this year, the average quote fell even further, to £181,000 and £162,000, respectively.

This dramatic fall in transfer values meant that the option to take a transfer is looking less attractive to members than it may have done a few years ago.

The average transfer value paid for the first quarter was £333,000 — the second lowest figure since the second quarter of 2015.

In addition to a drop in transfer values, new anti-scam legislation, which came in last year, has also led to delays in transfer values being paid out — which may also have suppressed take-up in the first quarter.

Members with DB pensions continue to ask for transfer valuations, but not in the same numbers as recorded in previous years. LCP’s administration team issued quotations for 1.3 per cent of non-pensioner members in the third quarter of 2023 and 1 per cent in the second quarter.

Overall transfer quotation activity, however, remains significantly lower than the peak in activity seen in 2017, when almost 8 per cent of deferred members requested transfer quotations with a total value of £778m.

In contrast, over the past year, LCP’s team have given transfer quotations to 3.8 per cent of deferred members, with a value of £230m in total.

LCP associate consultant Avneet Gill, says: "This dramatic fall in transfer values means that the option to take a transfer is looking a lot less attractive to members than it may have done a few years ago.

"Especially for those members who might have received a previous transfer value quotation or illustration and can see that the value has fallen sharply."

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