Defined benefit (DB) pension savers may be due "significantly less compensation" when transferring as a result of soaring annuity rates, analysis by OAC reveals.
OAC - part of the Broadstone Group - revealed many people who have been previously "ill-advised" to transfer out of their DB scheme are likely to be due less compensation as a result of the rising annuity rates over the last 18 months.
The firm said the recent increase in annuity rates means transferors are projected to secure a "historically high" level of guaranteed income from their remaining pension pot which will "minimise the financial disadvantage for those who are seeking compensation after being poorly advised to transfer their pension, and therefore the compensation they are due".
The firm's DB Redress Tracker revealed a transferring saver who made a compensation claim in January 2022 could have been entitled to £160,000. However, the firm said this has now fallen to £50,000 as of last month.
Source: OAC
OAC head of redress solutions Brian Nimmo said: "DB pensions offer huge security and peace of mind through retirement. The compensation process is in place to help retirees who suffered from poor advice that led to the loss of this guaranteed income throughout retirement.
"However, over the past 18 months we have seen a shift in the market whereby the rapid rise in projected annuity rates has meant people who did transfer out are now assumed to be able to secure far higher levels of guaranteed income.
"It mitigates the financial damage suffered by many DB transferors and means that they could be due significantly less compensation if they were to bring their case for compensation now."
