Increases in gilt yields has pushed DB redress payments down to a record low, according to new data.
First Actuarial’s redress tracker shows that redress on a book of DB transfer advice is likely to have fallen to around 2.5 per cent of the total transfer value — around half the level seen in 2025.
Since July 2025, investment returns on equities and other growth assets have shown a positive trajectory, which has also affected redress payments.
First Actuarial head of redress services Sarah Abraham says: “When we calculate redress for someone who has transferred a DB pension into a DC pension arrangement, we compare the amount of money the consumer holds in their new pension with the cost of buying an annuity to broadly replicate the DB pension they gave up.
“Gilt yields are a key driver for annuity prices – the cost of buying an annuity falls as yields increase. This makes the yields available a key driver of the size of redress payments.”
She adds: “Under FCA rules, redress offers made before 31 December 2025 will reflect market conditions at 1 October 2025.
“We expect redress payments to be lower than we’ve ever seen before, with many cases requiring no compensation at all. This is good news for those firms that are able to settle this quarter on complaints about DB pension transfer advice or recommendations to public service workers who may have chosen to set up freestanding AVCs rather than purchase additional DB pension.”
The First Actuarial redress tracker models the aggregate redress for a portfolio of notional cases. The notional portfolio reflects redress in relation to transfers from a variety of schemes, with a range of transfer dates and consumer ages.