DB pension transfer redress falls in Q1, says Broadstone

Compensation for defined benefit (DB) pension transfer redress cases fell sharply through Q1 2025, but rebounded due to recent market volatility, according to Broadstone’s latest DB Redress Tracker.

The quarterly tracker provided an indicator of the level of compensation due to those who were previously ill-advised to transfer out of their DB pension.

It followed the example of an individual who left their scheme in 2018 at the age of 50 with a pension of £10,000 per year, which would have received inflation-linked increases when in payment.

The tracker was developed in line with Financial Conduct Authority (FCA) rules for calculating redress, assuming the individual invested their funds to earn returns in line with the FTSE Private Investor Index.

Broadstone’s latest update showed that compensation for a typical pension transfer redress case continued to fall through Q1 2025, dropping from around -£16,000 at the end of 2024 to around -£22,000 at the end of March.

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

Broadstone said that if markets continue to fall, redress levels are likely to trend upwards in the second half of the year.

It added that with financial conditions softening and rates rising, the tracker demonstrated the radical decline in potential DB redress since the start of 2022, when average compensation for the use case was above £150,000.