There has been a 40 per cent increase in small pot pension transfers over the past two years, according to the latest data from Origo.
In total the number of transfers of pensions worth less than £10,000 increased by 42 per cent between 2020 and 2022, while there was a 32 per cent increase in the transfers of pots worth less than £1,000.
Origo added it has seen a 39 per cent increase in pension pots that were less than £30,000 — the threshold beyond which an individual must seek financial advice before a transfer can be made.
The Origo Transfer Service said it had carried out over a million transfers per year for the past two years, saw the overall number of transfers – across all pot sizes – increase 34 per cent in the same period.
The top three ages at which pension transfers occurred were, in order, 55, 56, and 60. The average transfer values for pensions accessed by those aged 31 to 45 were all under £30,000. The top three ages at which pension to annuity transfers occurred were, in order, 65, 66 and 60. Average values for these transfers were all in excess of £30,000.
Origo CEO Anthony Rafferty says: “As the figures above show, the percentage rise in the number small pot transfers through the Origo Transfer Service is marked and over and above the total rise in transfers undertaken by the service since 2020.
“Market performance will have affected pension pot sizes but, while Origo data does not show the reason for a transfer, it would not be unreasonable to suggest that the economic situation in the UK has been playing into whether and when some consumers are accessing their pensions.”
He adds: “Consumers accessing their pensions as short-term fixes to the cost of living crisis is a concern for the industry, as when inflation subsides, they could potentially have damaged their long term and retirement saving as a result.”
Origo undertakes the vast majority of the industry’s defined contribution pension transfers in the UK market, making its data a reliable measurement of activity in the market.