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AJ Bell: Pensions transfer activity has peaked

Statistics from the final quarter of last year suggest pension transfer activity has passed its high-point, with the FCA’s focus on the market forcing advisers out of play.

AJ Bell cites government figures showing that transfers dropped 20 per cent between October and December 2018, down to £6.3bn from £8bn.

AJ Bell senior analyst Tom Selby says: “A number of factors are contributing to the recent slowdown. Rising insurance costs for advisers are affecting supply, with a knock-on impact on the volume of transfers taking place.”

DB transfers may also be losing popularity following significant difficulties in the past two years, including the fallout from the British Steel Pension Scheme collapse.

Selby says: “The number of transfers will naturally edge lower as the population of members in DB schemes dwindles. Over time as DB disappears from the retirement landscape, we are likely to reach a point where guaranteed employer-sponsored pensions are practically non-existent in the UK.”

A total £92bn has been transferred out of defined benefit pensions in the four years since the pension freedoms began.

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  1. Might the fact that so many advisers and companies offering advice have stopped, or been forced to stop have something to do with it?

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