Jessica O'ConnorRecent global market instability has had limited impact on compensation levels for defined benefit (DB) pension transfers, according to analysis from Broadstone.
Its latest quarterly DB Redress Tracker for Q2 2026 indicated that, in most cases, no compensation is currently payable to individuals who transferred out of DB pension schemes.
The central estimate suggested a negative redress figure of -£40,000, meaning consumers are likely to be better off following their transfer.
The tracker modelled a typical case based on an individual who transferred out in 2018 aged 50, with a £10,000 annual pension linked to inflation.
Calculations were aligned with Financial Conduct Authority (FCA) rules and assumed investment returns consistent with the FTSE Private Investor Index.
As recently as Q2 2023, the central estimate suggested £57,000 in compensation would be payable, while the last instance of positive redress was in Q4 2024, when £2,000 was indicated.
Despite recent geopolitical tensions and market volatility, including asset declines linked to conflict in Iran and rising inflation expectations, the impact on redress calculations has been muted.
This is largely because weaker asset performance has been offset by rising bond yields, which reduce the value of the benefits individuals gave up when transferring.
However, Broadstone noted that outcomes vary significantly depending on individual circumstances.
Factors such as the timing of the transfer, the critical yield at the point of transfer and subsequent investment performance all influence whether compensation is due.
Transfers made between 2016 and 2018 were more likely to show gains, while older or more recent transfers may still result in losses.
Simon Robinson, senior consultant and actuary in Broadstone’s insurance advisory and remediation division, said: “While markets have experienced a period of heightened volatility over the past month or so, the impact on DB transfer redress calculations has so far been limited.
“Poorer asset performance would normally increase the likelihood of redress being payable, but this has largely been offset by rising short- to medium-term bond yields, which reduce the value of the benefits that would have been given up.
“Our central estimate continues to suggest that, in many cases, redress will not be payable for most consumers.
“However, the headline figure does not tell the whole story and outcomes remain highly dependent on individual circumstances such as investment performance, the critical yield at the point of transfer and the timing of the transfer itself.
“This means that while the overall trend in redress calculations has moved down significantly over the past few years, there will still be a cohort of consumers for whom redress is payable, and firms must continue to assess cases carefully rather than assuming no compensation will be due.”
