New data from actuarial consultancy OAC suggests that pension savers submitting a complaint about pension transfer advice would now receive just £12,000 in compensation, about half the amount they would have received at the beginning of the year and well below the levels of two years ago.

OAC said its figures suggested that good returns from investment markets were pushing down compensation levels.

The company says that pension transfer advice compensation is at “record lows,” according to its quarterly DB Redress Tracker.

Better investment performance, more stable interest rates and lower inflation expectations mean that at the start of Q2 2024 an “ill-advised transferor” submitting a complaint now could be due around £12,000, says OAC.

A successful complaint for redress at the start of 2024 would have seen the same individual receive over £29,000.

The latest figure is also a huge fall on two years ago when an ill-advised transferor could have claimed over £150,000.

OAC’s DB Redress Tracker follows the example of an individual who left their scheme in 2018 aged 50, with a pension of £10,000 per annum which would receive inflation-linked increases when in payment. The Tracker has been developed in line with FCA rules for calculating redress with the individual assumed to have invested their funds to earn returns in line with the FTSE Private Investor Index.

Brian Nimmo, head of redress solutions at OAC, said: “This decline is driven, at least partly, by good returns from investment markets, with financial indicators such as interest rates and projected inflation remaining broadly stable. 

“As the FCA brings in new ‘polluter pays’ reforms, it will be important for financial advice firms to remain on top of compensation fluctuations as they look to allocate capital against potential claims.”